Letting your property
Owners of property may rent their property as long as a Long Let/Holiday Letting License is obtained from the Ministry of Tourism. Such a License will be issued once the property meets the prime standard requirements. Properties with pools especially villas and similar upmarket residences are always given priority.
Licence application: www.mta.com.mt/index.pl/licences_application_forms
Lessors would need to register with the VAT as well as the Income Tax Department.
Income Tax Implications
- Income derived from the letting of immovable property can be of two types – investment income and income derived from a trading. Typically, the difference between the two is distinguished by whether the rental agreement is for Short periods - normally under six-months or over this period considered as Long Let.
- The tax deductions taken against these two types of rental income are different. Any expense incurred in the production of income derived from trading rental income is an allowable tax deduction, given that upon demand, the taxpayer would be in a position to present to the Inland Revenue Authorities supporting documentation.
- In the case of rental income derived from long lets where the rental activity is not a trade, the allowable deductions are (1) the MTA license fees if any, (2) ground rent and rents payable on property rented out, (3) any interest incurred on a loan specifically taken to finance the purchase (and perhaps the renovation) of the property from which rental income is derived, and (4) a further deduction equal to 20% of the rental income received less rents and ground rents payable and less the MTA licence fees.
Rental Income will be charged as follows:
Tax Rates for Residents
| “Married” Rates | ||
| First | Lm4,8940 (€ 11,400) | Nil |
|---|---|---|
| Next | Lm3,500 (€ 8,153) | 15% |
| Next | Lm2,000 (€ 4,659) | 25% |
| Remainder | over Lm10,000 (€ 23,294) | 35% |
| “Single” Rates | ||
| First | Lm3,250 (€ 7,570) | Nil |
| Next | Lm2,250 (€ 5,241) | 15% |
| Next | Lm1,250 (€ 2,912) | 25% |
| Remainder | over Lm6,750 (€ 15,723) | 35% |
| Tax Rates for Non-Residents(Married & Single) | ||
| First | Lm300 (€ 698.81) | Nil |
| Next | Lm1,000 (€ 2,329) | 20% |
| Next | Lm2,000 (€ 4,659) | 30% |
| Remainder | 35% | |
