The Malta Budget 2026, presented yesterday, introduces a comprehensive package of property-related measures aimed at making home ownership more accessible and affordable for Maltese residents. Here's everything you need to know about the new incentives and tax break.
Stamp Duty Reduction and Exemptions in the Malta Budget 2026
One of the most significant changes affects people who inherit the family home they already live in. Previously, when inheriting property through causa mortis
(inheritance upon death), beneficiaries paid a reduced stamp duty rate of 3.5% on the first €200,000 of the property's value, with the standard 5% rate applying to any amount above that threshold.
What's New: This preferential rate now applies to the first €400,000 of the property's value - effectively doubling the relief threshold. This measure provides substantial financial relief to adult children inheriting their parents' homes, reducing the tax burden during what is often already a difficult time for families.
For context, under the previous rules, someone inheriting a €400,000 property would pay 3.5% on the first €200,000 (€7,000) and 5% on the remaining €200,000 (€10,000), totalling €17,000 in stamp duty. Under the new rules, they'll pay just 3.5% on the full €400,000, amounting to €14,000 - a saving of €3,000.
First Time Buyers in the Malta Budget 2026
The Budget 2026 significantly expands support for first-time buyers struggling to enter the property market amid rising prices:
Deposit Assistance Scheme Expansion
The government scheme that helps first-time buyers with their deposit will now cover properties valued up to €250,000 - an increase from the previous threshold. This addresses the reality that property prices have risen considerably, and the scheme needed updating to remain effective for those purchasing starter homes.
Annual Grant Continuation
The existing €1,000 annual grant for first-time buyers will continue. This grant, paid over 10 years, provides €10,000 in total support to help new homeowners manage their mortgage payments and other housing costs.
Revolutionary Equity Sharing Scheme Expansion
Perhaps the most ground-breaking announcement in Budget 2026 is the dramatic expansion of the Equity Sharing Scheme - a move that could fundamentally change how young Maltese access home ownership.
Under this expanded scheme, the Housing Authority will pay up to half the cost of a property, effectively co-purchasing the home with the buyer. The buyer and Housing Authority become co-owners, with the buyer gradually repurchasing the Authority's share over time as their financial situation improves.
Key Changes to Eligibility:
- The scheme's eligibility age has been lowered from 30 to 25, recognizing that many young adults are ready to settle down and start families but are locked out of the property market due to high prices relative to their earnings
- Separated individuals using the scheme will now be able to purchase properties valued up to €350,000, providing crucial support for those rebuilding their lives after relationship breakdowns
This reform represents a structural solution to the affordability crisis, addressing the growing divide between stagnant wages and soaring property prices that have kept younger generations locked out of home ownership.
Making Incentives Permanent
In a move to provide long-term certainty, the government plans to codify first-time buyer incentives into law, making them permanent rather than subject to annual budget announcements. These incentives were first introduced in 2013 and have been renewed annually since then.
Clarification on "First-Time" Status
The budget clarifies an important point: people who previously purchased non-residential property - such as a garage, agricultural land, or a field - will still qualify as first-time buyers when purchasing their first residential home. This removes a previous grey area that may have discouraged some from making such investments.
Banking Support for Low-Income Buyers
The government has announced ongoing discussions with banks to facilitate mortgage access for low-income individuals. While specific details have not yet been elaborated, this initiative recognises that deposit schemes alone aren't enough if people cannot secure affordable financing to bridge the remaining cost.
Second Time Buyers Scheme in the Malta Budget 2026
While the Budget 2026 focused heavily on first-time buyers and inherited properties, there were no specific new schemes or incentives announced for second-time buyers. These purchasers will continue to be subject to the standard 5% stamp duty rate on property purchases.
However, second-time buyers can still benefit from existing exemptions and reduced rates in certain circumstances, such as purchasing property in Urban Conservation Areas (see below) or acquiring property below certain value thresholds in designated regeneration zones.
It's worth noting that the expanded equity sharing scheme and inheritance tax relief may indirectly benefit the second-time buyer market by freeing up starter homes as first-time buyers are better able to enter the market.
UCA Scheme Malta 2026
While yesterday's budget presentation did not announce specific new changes to the Urban Conservation Area (UCA) scheme, this important incentive remains in place to encourage the restoration and preservation of Malta's historic properties.
Current UCA Benefits (subject to eligibility):
- Reduced stamp duty rates for properties located in designated Urban Conservation Areas
- The scheme aims to incentivise investment in Malta's architectural heritage by making it more financially attractive to purchase and restore older properties in historic cores
- These areas typically include parts of Valletta, the Three Cities, and historic village centres
Property buyers interested in UCA properties should verify current rates and eligibility criteria, as these incentives are designed to balance preservation goals with making historic homes accessible to residents.
Malta Property Tax Benefits in 2026
Beyond stamp duty relief, the Budget 2026 confirms the continuation of various property-related tax benefits:
Inheritance Tax Relief
As mentioned earlier, the budget doubles the tax relief threshold for people inheriting a home they already live in. Currently, heirs pay a discounted 3.5% tax on the first €200,000 of the property's value. That threshold will now increase to €400,000, significantly easing the financial burden on families passing down their homes to the next generation.
This measure recognizes that many adult children continue to live in their parents' homes, either caring for elderly parents or due to affordability constraints in the property market. By reducing the tax burden on inheritance, the government aims to prevent situations where heirs are forced to sell the family home simply to pay the tax bill.
Continued Tax Deductions
While not specifically highlighted in yesterday's budget, property owners in Malta continue to benefit from existing tax deductions on mortgage interest payments and other property-related expenses, subject to eligibility criteria and caps.
Ready to Take Advantage of These New Incentives?
The Malta Budget 2026 presents unprecedented opportunities for both first-time and existing homeowners to achieve their property goals. Whether you're a young buyer looking to benefit from the expanded equity sharing scheme, considering a property in an Urban Conservation Area, or navigating inheritance tax implications, understanding these incentives is crucial to making informed decisions.
At Arcus Estates, our experienced team stays up to date with all the latest property regulations and budget measures to ensure you maximise your benefits. We can guide you through the eligibility criteria, connect you with the right professionals, and help you find the perfect property that aligns with both your needs and the available incentives.
Contact Arcus Estates today to discuss how the Budget 2026 measures can work for you and take your first step toward securing your dream home in Malta.