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Tax: Transfer of Property Acquired through Donation

by www.ird.gov.mt

Having doubts whether you are subjected to any tax if your property was by donation? According to our Income Tax Act it depends whether you are transferring the same property within 5 years or after so it is advisable to get a professional advice about the matter.

Transfer of Property Acquired through Donation

 

1. If I had acquired the property through a donation how am I taxed?

 

We have to distinguish between whether you transfer the property within 5 years or after 5 years from acquisition.

 

If transfer will occur within 5 years, you may choose either to have the transfer taxed under the old system or at 12%.

 

The following example shows how you will be taxed if you opt for the 12% final system:

 

You are selling property for €100,000. The tax will be equal to 12% of the value:

 

i.e. €100,000 x 0.12 = €12,000

 

In this case it is not relevant to know the value of the property at the time you acquired it.

 

If transfer will occur after more than 5 years, the tax will be equal to 12% of the difference between the transfer value and the acquisition value.

 

The following is an example:

 

The value of a property acquired through donation in 1985 was €20,000 and is now being sold at €100,000

 

Tax is calculated as follows:


0.12 x (€100,000 - €20,000) = €9,600.

 

The only deduction allowed is in respect of brokerage fees, which have to be supported by receipts. The name of the broker must be included in the contract and a copy of the receipt must be attached thereto.

 

The foregoing can be summarised as follows:

summary diagram

 

Source: www.ird.gov.mt

 

Home Guide Articles

Tax: Transfer of Property Acquired through Donation

by www.ird.gov.mt

Having doubts whether you are subjected to any tax if your property was by donation? According to our Income Tax Act it depends whether you are transferring the same property within 5 years or after so it is advisable to get a professional advice about the matter.

Transfer of Property Acquired through Donation

 

1. If I had acquired the property through a donation how am I taxed?

 

We have to distinguish between whether you transfer the property within 5 years or after 5 years from acquisition.

 

If transfer will occur within 5 years, you may choose either to have the transfer taxed under the old system or at 12%.

 

The following example shows how you will be taxed if you opt for the 12% final system:

 

You are selling property for €100,000. The tax will be equal to 12% of the value:

 

i.e. €100,000 x 0.12 = €12,000

 

In this case it is not relevant to know the value of the property at the time you acquired it.

 

If transfer will occur after more than 5 years, the tax will be equal to 12% of the difference between the transfer value and the acquisition value.

 

The following is an example:

 

The value of a property acquired through donation in 1985 was €20,000 and is now being sold at €100,000

 

Tax is calculated as follows:


0.12 x (€100,000 - €20,000) = €9,600.

 

The only deduction allowed is in respect of brokerage fees, which have to be supported by receipts. The name of the broker must be included in the contract and a copy of the receipt must be attached thereto.

 

The foregoing can be summarised as follows:

summary diagram

 

Source: www.ird.gov.mt

 

Home Guide Articles

Tax: Transfer of Property Acquired through Donation

by www.ird.gov.mt

Having doubts whether you are subjected to any tax if your property was by donation? According to our Income Tax Act it depends whether you are transferring the same property within 5 years or after so it is advisable to get a professional advice about the matter.

Transfer of Property Acquired through Donation

 

1. If I had acquired the property through a donation how am I taxed?

 

We have to distinguish between whether you transfer the property within 5 years or after 5 years from acquisition.

 

If transfer will occur within 5 years, you may choose either to have the transfer taxed under the old system or at 12%.

 

The following example shows how you will be taxed if you opt for the 12% final system:

 

You are selling property for €100,000. The tax will be equal to 12% of the value:

 

i.e. €100,000 x 0.12 = €12,000

 

In this case it is not relevant to know the value of the property at the time you acquired it.

 

If transfer will occur after more than 5 years, the tax will be equal to 12% of the difference between the transfer value and the acquisition value.

 

The following is an example:

 

The value of a property acquired through donation in 1985 was €20,000 and is now being sold at €100,000

 

Tax is calculated as follows:


0.12 x (€100,000 - €20,000) = €9,600.

 

The only deduction allowed is in respect of brokerage fees, which have to be supported by receipts. The name of the broker must be included in the contract and a copy of the receipt must be attached thereto.

 

The foregoing can be summarised as follows:

summary diagram

 

Source: www.ird.gov.mt