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The Maltese Government has announced a simplified system for determining real estate valuations for capital gains tax purposes, implementing measures announced in last year's Budget speech.
Under the outgoing system, the tax authorities appointed agents to undertake a property valuation for every property transfer. This system caused delays and attracted criticism that the valuations seem to have been based upon subjective criteria, and were only undertaken after a property contract was concluded.
Under the proposed rules, now confirmed by the Government, parties may elect to appoint an independent architect to undertake the valuation for tax assessment purposes, however the tax authorities will still review all valuation reports and continues to reserve the right to investigate any valuation that falls outside of Government expectations. If parties prefer, they may alternatively use the old system whereby the Government will arrange the valuation.
Finance Minister Edward Scicluna explained that this initiative was drawn up in consultation with stakeholders in the sector, such as the Malta Developers' Association (MDA), the Chamber of Architects, and the Notarial Council of Malta, to ensure that the initiative is successful. The recent introduction follows vocal calls from the MDA earlier this month.
This property valuation system will be applicable to every transfer of any immovable or any real right over an immovable property, both during life and upon death.
The Malta Developers Association welcomed the announcement, stating: "This step will continue to contribute to a lessening of the uncertainty of the property market since the property's value subject to tax will now be determined according to fixed parameters, according the the property's characteristics, which can be applied by any architect."
"The MDA, which had asked for this change in the system, feels that it should publicly express its appreciation towards the Minister of Finance, who implemented this Budget measure, as well as to the contribution given by the Chamber of Architects and the Notarial Council, which together with the Government drew up the new system."
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