Taxing times in Malta
The Maltese Government has launched a new redemption scheme for property that is leased from the Government - which could means that homeowners stand to lose up to 25 per cent of the property's value as they have been prevented from applying for the ground rent redemption scheme for four years…
[ClickPress, Tue Apr 07 2009] The Maltese Government has launched a new redemption scheme for property that is leased from the Government – which could means that homeowners stand to lose up to 25 per cent of the property’s value as they have been prevented from applying for the ground rent redemption scheme for four years…
Maltese property owners affected by this new scheme are furious that they stand to lose up to a quarter of the value of their property.
Owners of properties leased out from the Joint Office, which are currently subject to a ground rent redemption scheme which was introduced in 2002, claim to have been prevented from applying for the scheme for four years and now stand to lose out in a big way.
When the scheme was first brought in seven years ago, it gave owners the opportunity to redeem the ground rent, thereby becoming owners of their own residences. The scheme was in line with the spirit of the Church-state agreement of 1991 whereby the Church transferred to the state about 80,000 properties for these to be used in the furtherance of social justice.
As expected, this scheme was greatly welcomed and more than 5,400 requests for redemption were made to the Government Property Division (GPD) but more than 3,000 were turned down without due explanation.
Last month, the conditions of the scheme were changed in order to avoid abusive property speculation – some speculators were making thousands from the scheme and many of the properties were turned into blocks of flats.
Now, applicants are required to satisfy a set of checks that will determine that the property being redeemed is indeed the applicant’s residence.
If the property is redeemed and then sold for redevelopment purposes, a percentage of the resale shall be paid to the Government, and if the resale takes place within five years from redemption, 25 per cent of the reselling price will need to be paid to the Government.
Thus, owners stand to lose up to a quarter of the value of their property.
After five years, the percentage paid drops by five per cent every five years. After the first five years, no percentage will be due to the Government as long as the unit of residence is used as a residence for a maximum of 20 years.
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