Here is the information on the ‘first-time buyers’ property tax scheme – if you entered into a promise of sale before July this year, you don’t qualify
Published:
November 8, 2013 at 10:14am
The information you need is here. 0942_001
It is for couples and also for single people, but you have to have entered into a promise of sale (konvenju) from July this year onwards.
If you entered into a promise of sale before that date, you don’t qualify.
If notaries and other professionals think there is anything else that should be highlighted, I would be grateful if they would post their comments below for the information of readers.
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So this is valid for those who buy from July… till when?
This scheme looked good at face value but it is a pity that there are going to be so many disappointed couples whose contract will be published in 2014 but just because their promise of sale was concluded before the cutoff date of 1st July, will unfortunately not benefit from this scheme. No one seems to know the motive for this discrimination.
It is highly discriminatory that someone who has signed a konvenju on the 30th June or before and who will sign the final deed on the 2nd of January like someone who signed just on the 1st July has to pay 5,250. We are talking a big amount of money here like half a year’s work for the average employee.
Simple….solution…
Cancel promise of sale and re-draft a new one.
[Daphne – Clearly, you have not read the PDF uploaded here, as you would otherwise have known that there are provisions against this ‘simple solution’.]
I do! Email?
[Daphne – If it’s fairly short, please just post it directly here as a comment. Otherwise, please email me at [email protected]]
This is a scheme that introduces unnecessary instability in the property market.
The real question is: what happens after 2014? If the 3.5% tax is reintroduced in January 2015, as government says, then one can foresee a collapse in sales to first-time buyers during 2015 and perhaps even 2016, affecting the overall property market.
We already have 72,000 vacant properties. Even with 32,000 summer houses (that are still property), we still have a substantial oversupply. And this government is certainly going to increase permits given to developers.
We also already know that banks are overdependent on property loans. This makes Malta prone to a property bubble. And we know what happened to Spain and Ireland when theirs burst.
If government really wanted to benefit first-time-buyers, it should have removed or reduced the tax permanently. The property market needs stabilizers, not the inherent instability there is in this one-year scheme.
And government (nowadays the ‘lunga manus’ of the developers) should have consulted with ECONOMIST Edward Scicluna (not politikant Edward Scicluna).
As an economist, Edward Scicluna would have advised government that the (temporary) removal of this tax will mostly or totally benefit the seller, not the first-time-buyer.
It’s a complex economic argument about elasticity of demand, but in layman’s terms it just says that in 2014 buyers will know this is just a one-year time-window to buy at what buyers perceive to be a 3.5% discount, so sellers will just increase their asking prices by 3.5% or very close.
ECONOMIST Edward Scicluna would also have lectured government on the difference between productive and speculative investment.
If we borrow to invest in production (eg small businesses, cutting edge industry), especially that geared towards exports (or selling in the local market reducing imports), that increases production in our economy and gives us an income stream, jobs, and government revenue we can enjoy for several years.
But if we borrow to buy property, we produce (almost) nothing. Of course there is the building itself (already done and becoming ever more efficient with modern machinery and foreign undeclared labour), commissions and interest to banks, but that’s a small proportion of what we actually borrow when we buy property, the largest part of which pays for the ever dearer land property is built on.
ECONOMIST Edward Scicluna would have had a very profitable (for the country) opportunity to employ his skills for our general benefit and to enlighten us on what economics has taught us through the ages. But he has now become a politikant in a government beholden to developers.
Those who have a promise of sale dated before 1 July 2012, will not be allowed to nullify it and make a new one to qualify for the scheme.
If a couple buy jointly, and only one is a first-time buyer; then they will qualify for half of the tax scheme.
On Xarabank, Tonio Fenech said that tax collected at source on dividends at 35% will not qualify for a refund as normally happens to those below the 35% threshold. So for a lot of people the tax will go up, not down.
People over the 35% bracket will not benefit from the tax reduction on their income from dividends.
The finance minister, also in the panel of Xarabank, did not deny or confirm.