Delivering Homes

Tax on Residential Income

Individuals or companies who rent out immovable property both for residential and commercial purposes can opt for a 15% final tax rate that cannot be claimed back. The yearly deadline for such tax benefit is in April, as it is four months following the end of the year in which the rental income was derived.

Interested applicants, both Malta residents and non-residents, will have to submit the TA24 form in relation to ‘Basis Year 2018’ together with the payment to the Inland Revenue Department by 30th April, 2019.

This flat rate of 15% tax is calculated on the gross income of either individuals or companies, depending on who is renting out the property. The tax on residential rentals is applicable to those properties rented as from 1st January 2014, while the tax on commercial property is applicable to properties rented as from 1st January 2016.

When applicants choose to apply this 15% tax rate, this does not bind them to use the same rate year after year, but it is the applicant who decides on whether to keep using that final 15% tax rate or not.

Undeclared rental income and penalties

Residential properties or garages that were rented out in the past years but their rental income wasn’t declared can only benefit from 15% tax rate if they opted for this rate up by 30th June, 2015. Undeclared income as of 1st July, 2015 has to be declared and will be subject to the normal progressive rates.

In case of undeclared rental income for tax purposes by companies, their tax will be charged at 35% on the gross rental income and they will have to submit an AF2 form. This increased tax rate will be in addition to further penalties as decided by the tax authorities.

If you would like to submit the requested forms by April, you can get in touch with our colleagues from Accounting Services Ltd on admin@accountingservices.com.mt

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