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L.N 35 of 2018 – Duty on the Acquisition of the Second Immovable Property to be used for Own Residence (Exemption) Order, 2018

L.N 35 of 2018 refers to the exemption from duty on the acquisition by an individual of a second immovable property which is to be used for his/her own residence. Where an individual transfers his/her residential immovable property and acquires another residential immovable replacement property within 12 months from the date of transfer of the residential property sold, the duty paid on the initial €86,000 of the value of second immovable property shall be refunded.

In order for this refund to be given, the following conditions need to be satisfied:

a)The transfer of the replaced property must qualify for tax relief under Article 5A(4)(c) of the Income Tax Act, Chapter 123 of the Laws of Malta;

 b)The replaced property must have been acquired by way of transfer that qualified for relief under Article 32(4)(a) of the Duty on Documents and Transfers Act, Chapter 364 of the Laws of Malta;

 c)The acquisition of the replacement property must qualify for duty relief under Article 32(4)(a) of the Duty on Documents and Transfers Act however acquisitions made through gratuitous title in accordance with rule 3(2) of the Duty and Documents and Transfers Rules are excluded;

 d)If the replaced property had qualified for an exemption under Article 3 of Exemption of Duty in Terms of Article 23 Order or under article 32C of the Duty on Documents and Transfers Act, 5 years should have elapsed on the date of acquisition of immovable property;

 e)The individual must not have owned any other residential immovable property acquired through a transfer inter vivos before the acquisition of the replacement property other than the replaced property in case where the replacement property is acquired before transferring the replaced property;

 f)The transfer of the replaced property must be made within 12 months from the acquisition of the replacement property

The said refund will be given pro-rata according to the share of property being acquired.

Duty refundable to persons with disability

Those persons who are on the Register of Persons with Disability kept by the Commission for the Rights of Persons with Disability, who are in possession of an identity card issued by the same Commission and who benefit from any Disability Assistance in accordance with article 27 of the Social Security Act, the duty paid on the first €150,000 of the value of the replacement immovable property will be refunded.

Duty refundable to guardians of persons with disability

Guardians of persons who are on the Register of Persons with Disability kept by the Commission for the Rights of Persons with Disability who reside in the same household, who are in possession of an identity card issued by the same Commission and who benefit from any Disability Assistance in accordance with Article 27 of the Social Security Act or a Disabled Child Allowance in accordance with Article 77 of the Social Security Act, the duty paid on the first €150,000 of the value of the replacement property shall be refunded.

Applicability

These provisions shall start apply to acquisitions affected from 10th October 2017 up to 31st December 2018. The form contained in the First Schedule of the Duty on Documents and Transfers Rules should be delivered to the Commissioner for Revenue on or before 28th February 2019.

In cases of refundable duty for persons with disability or guardians of persons with disability, the benefit would apply to acquisitions taking place from 1st January 2017.

Procedure for refund claims

Any claims for refund subject to LN 35 of 2018 are to be:

  • Made in writing;
  • Will not be considered by Commissioner if made after 2 months from the date of the last contract;

After the claim for refund is made, the Commissioner will confirm eligibility of the applicant and the person who acquires the property will be obliged to submit any information that may be requested in the course of determining eligibility.