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Property tax exceeding capital gains, developers claim
Withholding tax on artificial property values exceeding capital gains, Malta Developers Association concerned on the way property is being taxed.
13 April 2012, 12:00am
Matthew Vella
Matthew Vella
1 min read
The Malta Developers Association has appealed to the Finance Minister to heed their call on market valuations of property.
The Malta Developers Association (MDA) is claiming government-imposed values on newly acquired property are not reflecting the real value of the dampened real estate market.
The result has been a higher than expected final withholding tax - currently at 12% - on the market value of the property being sold.
"We're preoccupied with the way the property market is being taxed by the government... it appears it is refusing to recognise that the property market is not what it was and it continues to insist that market values have remained the same as they were a few years back, when in reality the situation has changed totally," the MDA said in a statement.
"When this market is in difficulty, it is in the interest of the national economy that there will be no obstacles to the process of what should be a free market - that is, a market that leads to the rising and falling of prices according to circumstances."
The MDA said that there are too many instances when the final 12% withholding tax on the value imposed by government architects is so high that the tax exceeds the capital gain that is supposed to be taxed. "This discourages the possibility that prices will go down and is putting those who are under pressure to sell their property at low prices because of bank loans and other factors in an impossible situation."
"We don't expect the government to help or subsidise developers, but that the tax imposed by the government is just and not one that leads to an artificial increase in property prices when the circumstances indicate otherwise.
Matthew Vella, a freelance journalist at MaltaToday, was formerly executive editor at Malt...
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@ Realistic - But whom do you want to kid? No profit or very little! Imsikken! Go slow or you will soon have me in tears. And the 100% margins on land costs and construction. So you want the sole property owner and garden variety citizen to bail out the large mega millionaires robber barons. If the PN goes your way, it would surely be the final nail in its coffin! Somehow I do not believe Labour would be so naive or corrupt.
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BETTER FUTURE fully agree with you. Realistic no, the government should tax much more property sold to foreigners. We want our country back.
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Perhaps what the Government should consider is taxing all property transactions albeit at a lower rate. Under the present regime Capital Gains Tax is not charged on residential property that has been owner occupied for at least three years. Government could introduce a tax of of 5% across the board covering all property transactions. As a further form of relief stamp duty could then be lowered from it's existing 5% down to say 2% for all property sales of up to €300,000 in value and maintained at 5% for sales above the €300,000 mark. In that way Government itself would be helping developers to lower their costs thus promoting a reduction in prices. Readers should bear in mind that tax , planning costs and stamp duty represent the lions share of a property's sale price . Developers earn less than Government does on property transactions.
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So what! It balances out (not by much mind you) those plentiful years of excessive profits and undeclared values! Government should introduce a tax regime which penalises those developers which reduced Malta to environmental poverty.
