 At Karkanja Ltd, we take pride in providing the best service to our customers. Purchasing a property is an important investment and we aim to help you understand every step that is involved from when you first view a property to the successful signing of the preliminary agreement (promise of sale 'konvenju') and contract. Here we aim to explain all procedures including legal and tax requirements for local residents and foreigners. Please feel free to contact us should you have any queries or if anything is unclear. Making An Enquiry With Us
Signing the Preliminary Agreement (Promise of Sale)
Signing the Contract
Taking a Home Loan
Legal Expenses and Tax
Foreigners Buying in Malta
Making An Enquiry With Us
From the moment you make an enquiry with us, we are able to show you the property you are interested in or others that match your criteria, and help you to shortlist those that meet your requirements most. If you do not reside in Gozo, we are able to pick you up to and from the Mgarr Harbour to show you the sites that may interest you. For those of you who are unable to visit us for an enquiry, we can send you to-scale plans and site plans, including copies of planning documents as required by the Malta Environment and Planning Authority and other permits by post, or we can email you the required plans in pdf format. We also aim to provide all plans in pdf format on this website. If you do decide to purchase we can help you to find the payment terms that best meet your needs. We offer flexi-pay options, and we can guide you when it comes to local bank loans. We can build a payment package that best fulfills your needs.
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Signing the Preliminary Agreement (Promise of Sale)
Once buying and selling terms and conditions have been agreed between us, the preliminary agreement is what binds us to sell and you to buy the property at the agreed price and within the agreed timeframes. The preliminary agreement is written and signed in front of a notary of your choice, and a deposit is paid. Our deposit requirements at preliminary agreement stage are usually 9% of the contract price, but this varies accordingly, (please see 'Flexipay - Payment Options' for more information). 1% is paid prior to the preliminary agreement for confirmation of purchase. 20% of the stamp duty amount is paid on the preliminary agreement (see more information on stamp duty below). Within 3 weeks the notary registers and passes the 20% stamp duty to the Inland Revenue Department to legalise the preliminary agreement according to Maltese law.
In helping you prepare for the preliminary agreement we send you all its documentation beforehand for your review, and a draft copy of the preliminary agreement is also sent to the notary of your choice. We follow the same practice for the eventual signing of the contract. The timeframe between the signing of the preliminary agreement and the signing of the contract is usally of 3-6 months duration, depending on whether you are buying on plan or not. When buying on plan it can be up to 1-2 years duration.
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Signing the Contract
The contract can go ahead once the notary has carried out all the required searches on the property and only when a bank loan (where required by client) is approved. At this stage the remaining 80% stamp duty price is paid, and the notary registers the contract at the public registry.
Our preliminary agreements and contracts are well researched, and we strive to ensure that any detail that is important to you is not left out. We take this responsibility very seriously and have built a strong reputation for providing accuracy and an ethical service. We ensure that the notary and our clients are given the necessary assistance and have all the right documentation. We also constantly follow up with lending institutions and Government Departments, as may be required, for any pending permits or other documentation required by law for the signing of the contracts.
We take pride in the high standards which we have built into our contacts. Our clients have appreciated the detail we have gone into to ensure that residential quality and safety standards are maintained. These standards help to maintain the value of your property and investment, and your well-being, as well as of those living around you.
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Taking a Home Loan
When considering a home loan, our experience gained over the years and frequent meetings with banking institutions will make what seems to be a complicated and burdensome procedure a very simple one. We will guide you as to what the banking institutions are currently offering and indicate to you your best options. Below are the documents you would require for any home loan. Having these prepared will give you a quick reply from the banks usually within 1 or 2 working days.
Purchase and Property Documentation
• Architect's estimation of the property value (the bank provides the form that must be filled in by an architect of your choice or provided by us);
• Copy of signed preliminary agreement (given to you by notary);
• Approved plans and site plan by the Malta Environment and Planning Authority (provided by us);
Personal Documentation
• Recent pay slip and FS3;
• Character reference (unless customer is already an account holder of the bank concerned);
• Photocopy of ID card.
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Legal Expenses and Tax
Stamp duty
When the property being purchased is to be used as the purchaser's ordinary place of residence, stamp duty is charged at 3.5% on the first €69,881 and 5% on any amount over €116,468. This applies for any nationality;
For any other property purchase, stamp duty is charged at 5% on the total value of the property;
Stamp duty on the purchase price must be paid, as already mentioned above, at 20% on the signing of the preliminary agreement, and the remaining 80% upon signing of final contract;
No stamp duty is charged on the value of movable property (furniture and fittings) which are being transferred with the immovable property, and on contract of works e.g. finishings, on which 18% VAT is applicable;
Stamp duty for non permanent foreign residents is calcualated at minimum thresholds (currently €104,509 in the case of apartments and maisonettes and €174,133 in the case of houses).
Notarial Fees
Notarial fees depend on whether you are taking a home loan (due to added registration costs) and if the property you are purchasing falls within a registration area as specified by law. As an indication, notarial fees are normally 0.75% and 1.5% of the contract price. Such fees will include the property final searches and registrations and any other legalities.
Any other taxes are borne by us.
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Foreigners Buying in Malta
There are restrictions for foreigners buying in Malta as to safeguard a good housing stock for the local population. These restrictions apply only if you don't become a full time resident. To be considered a full time resident one has to pay local income tax at a favourable final rate of 15%. If you do not become a full time resident, an 'Acquisition of Immovable Property Permit' (AIP permit) would be required by Malta's Ministry of Finance, and only one property can be bought.
An AIP permit is usually granted within 6 to 7 weeks. It is granted for immovable property where the value is not less than €104,509 in the case of apartments and maisonettes and €174,133 in the case of houses. The property purchased must also be solely used as a residence only for the applicant and his/her family (and rented out only according to set criteria). A property can be purchased below these thresholds if it is being bought in shell or unconverted and an architect's certificate indicates that the property requires additional costs which bring it to the level of the threshold to make it habitable.
Documents required for an AIP application include:
• A copy of the signed preliminary agreement;
• Photocopy of passport;
• Two passport sized photos.
The administrative charge for an AIP permit is €232.94
The AIP application procedure is taken care of by the notary.
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