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Buying a Property

Inter Vivos Following a Promise of Sale agreement

Once a promise of sale is signed, it is to be presented at the Capital Transfer Duty within 21 days of the actual signing. At this stage a provisional duty of 1% is paid by the purchaser; i.e. if the price declared for a property is €200,000, then the duty payable on contract would be €10,000. Hence, the provisional duty payable would be €2,000. A receipt for such payment is issued. The market value of the property does not necessarily have to be the same as the price declared on contract. Thus, the duty payable should be calculated on the higher value.

After a Contract is Signed

Upon signing of the contract, the notary publishing the deed submits the relative ‘DDT1’ form at the Capital Transfer Duty together with site-plans, a copy of the Public Registry note, the stamp duty payment (due by the buyer), the capital gains tax payment (due by the seller) and Schedule 8 (for residential property only). The relative receipts are normally issued not later than 3 weeks from the date of submission of the notice of transfer (DDT1) at the department.

At this stage, an internal departmental board will decide whether an architect is sent to inspect the property in order to establish the market value of the property. Although valuations are carried out professionally, they still remain subjective. For this reason, the law allows a 15% tolerance between the declared value and the market value established by the department’s architect. If the difference between the market value as established by the department’s architect and the price declared is more than 15%, the department will issue a claim (assessment) both on the buyer and the seller.

In the case of the buyer, the claim issued will include the duty due together with the additional duty (penalty). The duty is calculated on the value added by the architect at the applicable rate; the additional duty (penalty) is equivalent to 20% of the duty due. In addition, if the claim is not paid, the transferee shall be liable to pay interest at the rate of zero point seven five per cent (0.75%) for every thirty (30) days or part thereof, which interest shall start accruing after the expiration of three months from the date of notification of the original assessment.

What happens after an Assessment

An objection in writing will only be valid if it specifies the valid grounds it is based upon and if submitted within thirty days from the date of service of assessment. If no agreement upon objection is reached, the Commissioner shall issue a Refusal. The refusal may be appealed before the Administrative Review Tribunal within 30 days from date of notification of the refusal.

Legal Action for Collection by the department

 
If a claim is not settled or not objected to, the Department may initiate legal action for collection of the duty/additional duty as the case may be. At this stage, legal fees will start to accrue upon the pending claim.