Labour promises tax-free property gifts to children worth up to €1m
Abela reveals sweeping succession tax reform at PL event
A re-elected Labour government would allow parents to transfer property worth up to €1 million to their children free of stamp duty, Prime Minister Robert Abela has announced.
Speaking on the Labour Party podcast Isma’ Dean on Saturday, Abela said the exemption threshold on inter-vivos donations – property gifted to children during their parents’ lifetime – would rise from €250,000 to €1 million, as long as the property becomes the child’s primary residence.
This would be part of a broader package of reforms to the succession tax regime.
Another pledge would see heirs who choose to live in any inherited property, including secondary properties, as their primary residence, paying no succession tax at all. Right now, heirs are only exempt from the succession tax if they choose to live in a property that was the primary residence of their parents.
Those who inherit a secondary property but do not move into it would still face the existing 5% succession tax rate, but would be allowed to defer payment, interest-free, for up to seven years or until the property is sold.
The reform would also protect families whose elderly relatives move into care homes. Under the current law, when a parent moves to a care home and changes their residential address to the home, the residence they had been living in becomes stripped of the primary residence status. Under the proposed changes, the original family home would retain that status regardless.
In another proposal, parents who demolish their home to develop separate units for their children would be entitled to a 50% VAT refund on the construction costs.
Abela said the proposals are the result of months of consultation with legal and fiscal experts.
Earlier in the week, Nationalist Party leader Alex Borg proposed abolishing the succession tax entirely. Abela argued that this would leave heirs worse off, since they would have to pay 8% stamp duty on any future sale of the property.
Abela also defended Labour’s proposal for a €1,000 annual “super bonus” for workers. He dismissed the PN’s criticism of the measure and accused the Opposition of miscalculating the cost of their own proposed income tax cut by more than €250 million.