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Selling 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. The market value of the property does not necessarily have to be the same as the price declared on contract. Thus, the tax 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 vendor’s case, only the additional duty (penalty) is charged which is equivalent to 20% of the duty due by the buyer.
 
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.