A budget proposal offering a tax incentive for people looking to fix up old properties in an urban conservation area (UCA) has been launched by the government.

Details of the scheme, first announced in the Budget 2022 speech, were published in the Government Gazette last Friday.

It promises owners of certain types of property VAT refunds of up to €54,000. So what's in the fine print? 

Who is eligible?

You must be a Maltese resident over 18 who owns a private residence that is either:

  • within an Urban Conservation Area
  • built at least 20 years ago and vacant for at least the last seven years 
  • new but built and finished in line with "established guidelines" and approved as such.

The document does not specify what those "established guidelines" for new properties are, though Planning Minister Aaron Farrugia said last week that such buildings would have to be built in a traditional Maltese style. Farrugia said that a committee would be tasked with assessing those applications. 

Properties must be used as private residences to qualify. 

What will disqualify my property from being eligible?

If your property has:

  • unauthorised works that need sanctioning
  • illegalities
  • pending PA enforcement cases 
  • pending regularisation cases

it will not be eligible for the grant. 

What works are eligible for VAT refunds?

Eligible works must have started from October 12, 2021 onwards. 

Costs related to restoring and finishing your property are eligible, including the cost of materials, labour, the hiring of equipment, professional fees, planning fees and other government charges. 

Both exterior and interior finishing works are eligible, including plastering and painting, electricity and plumbing works, tiles and marble, internal and external doors, windows and bathrooms.

Tiling qualifies as an eligible expense under the scheme. Photo: ShutterstockTiling qualifies as an eligible expense under the scheme. Photo: Shutterstock

Professional fees, such as architect’s fees, specialist consultancy or project management costs are also eligible but will be capped at a maximum rate of 10 per cent of the total eligible expenditure applied for each application.

What works are not eligible?

You will not get any VAT refunds for demolition works, and alterations, additions or improvements that do not qualify as restoration or finishing are also not eligible. 

Other things that are ruled out include restoration or conservation works of movable objects, artefacts or furnishings, and any reconstruction or reinstatement works in UCA properties that are done despite a lack of historic evidence of their detail or design. 

The scheme applies to anyone who owns or is going to purchase a UCA property for use as a private residence

Can I split up the property?

No. Properties that benefit from the grant cannot be divided, meaning the number of residences in the unit must remain the same. If the property is re-developed into separate residential units, then the applicants will be required to pay back the full amount paid to them under this grant.

Can I apply for grants on more than one property?

Yes. Applicants are allowed to apply for the grant on multiple properties, where they will be awarded a maximum aggregate of €54,000 on each property.

However, they will not be able to apply for any other grant related to restoration or finishing works on the same property within five years of receiving this grant.

Applicants who intend to apply for the grant on more than one property must file separate applications for each property.

Do I need to apply for all refundable expenses in one go?

No, you can split your application into a maximum of two tranches, depending on the stage of the works. In other words, you can apply for refunds at the end of the restoration phase of your works, and then again once finishing is complete. 

What do I need to apply? 

If you are applying for refunds for a UCA property, you will need to submit a certificate issued by the Planning Authority certifying that the property does indeed fall within a UCA.

If you are applying for a property that was built at least 20 years ago that has been vacant for at least seven years, you will need to submit documents issued by utility billing agency ARMS confirming that the property was vacant. You will also need an architect to certify the building's construction date. 

If you are applying for a grant related to a new property, you will need to submit a certificate from the -undefined - "competent authority" appointed by the finance ministry, confirming that the property was built and finished according to "established guidelines." These are also undefined. 

In all cases, you will also need to submit fiscal receipts for the relevant works. 

The receipts must include the applicant's details and also include the address of the property. 

Applications will be accepted online, through an as-yet-undisclosed electronic portal. 

How long will the scheme be open?

The scheme is set to remain open until December 2024.

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