Tax incentives for property owners launched

Tourism, culture and the environment minister Mario de Marco finance minister Tonio Fenech launched two tax concession schemes to further stimulate investment in restoration and conservation of Grade 1 and Grade 2 scheduled buildings and buildings within Urban Conservation Areas (UCAs) for the purpose of selling or renting as well as such buildings used for commercial purposes.

The ministers said that the measures are aimed at "promoting sustainable urban regeneration and reversing the trends of residential vacancy, dilapidation and urban decay."

These schemes form part of the larger package of financial incentives announced in the 2012 Budget with the aim of promoting sustainable urban regeneration.

Under the scheme for the restoration of properties for the purpose of selling or renting, persons or companies that restore their property scheduled in grades 1 and 2 or property within a UCA for the purpose of selling or renting within the eligible period starting from 20th December 2012 until 31st December 2014 shall be entitled to a number of tax concessions.

The concessions include a 10% rate of tax on income from rent for residential purposes and 15% on income from rent for commercial purposes. In the case of sale, a final tax of 10% instead of 12% will be paid on the transfer value and the capital gain tax went down from 35% to 30%.

The total tax benefit shall not exceed the maximum of 50% of the total amount of eligible expenditure invested in restoration, provided that the maximum value of tax benefit received in respect of a Grade 1 and 2 scheduled building shall not exceed €30,000 per beneficiary and provided further that the maximum value of tax benefit received in respect of a building in UCA shall not exceed €20,000 per beneficiary.

Furthermore the total amount of benefits received by any beneficiary under this and all other de minimis schemes shall not exceed €200,000 over the applicable 3 year financial period, and provided further that the above tax benefits shall be claimed before 31st December 2015.

The minimum size of eligible expenditure in restoration and conservation that shall qualify for assistance under this scheme shall not be less than €5,000.

Due to limited funds, this scheme is being made available to a maximum of 1,000 building/applicants on a first come first served basis.  Only one building per applicant is eligible to qualify for support under this scheme.

Eligible expenditure that may qualify for this incentive includes the cost of works related to restoration, cleaning and maintenance of the facade, repair or replacement of doors and apertures, repair or replacement of traditional wooden/masonry balconies, paint and plaster works, consolidation and restoration of the internal building structure that includes repair or replacement of 'xorok' and timber/steel beams, arches and 'kilep', reconstruction or maintenance of roofs and wells.

Costs of materials, labour, hire of equipment, professional fees including architect's fees, specialist consultancy, project management costs capped at maximum rate of 5% of the total restoration costs, as well as MEPA permit fees and other government charges that are directly related to restoration would be eligible for the grant.

Applicants will have until 31 December 2013 to apply for this concession in accordance with the process described in the Government Notice and in the relevant guidance for applicants available from the MEPA website www.mepa.org.mt.

The second scheme announced aims at stimulating investment in restoration of commercial properties. This scheme aims to promote the restoration, conservation and maintenance of Grade 1 and Grade 2 scheduled buildings and buildings within Urban Conservation Areas (UCAs) that are or shall be used as commercial premises.

Companies that commission such works shall qualify for a tax credit of up to: €20,000 covering 20% of eligible costs for the restoration, conservation or maintenance of a building in a UCA; and €30,000 covering 30% for the restoration, conservation or maintenance of a Grade 1or Grade 2 scheduled building.

This incentive shall be available until the 31st December 2013, yet may be closed earlier if the allocated funds of €2 Million are fully committed at an earlier date. Applications shall be received as from 2 January 2013.

All the necessary information, guidance and application forms in relation to this scheme will be available on www.mepa.org.mt and www.maltaenterprise.com