Cost of property incentives since 2018 reaches €160 million

Malta’s property buyers have collectively saved a total of €160 million in taxes since 2018 under four schemes meant to help people get on the property ladder and incentivise the purchase of properties in certain areas.

In response to a number of parliamentary questions posed by Labour MP Chris Agius about the total amounts saved by house buyers due to tax reductions and exemptions for first- and second-time buyers and buyers of properties in Urban Conservation Areas (UCA) and in Gozo, Minister for Finance Clyde Caruana tabled a slew of figures that reveal the impact of these subsidies on the public purse.

The schemes offering exemptions from stamp duty, also known as tax of documents, for a set amount of the total purchase price. For example, for first-time buyers, the first €175,000 of the property’s price was exempt from stamp duty – an amount later revised upwards to €200,000.

Taking into account the total tax reduced from 2018 to the end of September 2023, the first-time buyers’ scheme cost €85 million, while incentives for the purchase of properties in Gozo cost €40 million

The UCA scheme saved buyers €32 million in taxes, while the second-time buyers’ scheme saved them €2.9 million.

The biggest savings were achieved in 2022, when property buyers saved a total of €43.6 million.

These figures seemingly do not take into account the major cuts in stamp duty in 2021, which formed a key pillar of the Government’s strategy to support the important real estate sector during the COVID-19 pandemic.

Tax on documents was estimated to bring €180 million into the Government’s coffers in 2022, meaning that the €43.6 million driven to subsidies the real estate market would have increased this line of revenue by close to 25 per cent.