S.L. 123.27 Art. 2Computation of gains.

(1) In computing the gains or profits on the transfer of immovable property the following shall be taken into consideration:

(a) the cost of acquisition which shall include:

(i) the cost of property transferred declared in a deed of purchase and any expenses directly related to such deed including duty under the Stamp Duties Ordinance, the Duty on Documents Act, the Duty on Documents and

Transfers Act, and agents’, legal and notarial fees proved to the satisfaction of the Commissioner;

(ii) where the immovable property in question was acquired causa mortis or by means of a donation, its value at the time of its acquisition, determined in accordance with the following sub-rules;

(iii) any expenditure proved to the satisfaction of the Commissioner to have been wholly and exclusively incurred in developing the property being transferred;

(iv) duty paid in terms of the Duty on Documents and Transfers Act on the transfer of causa mortis the immovable property in question, including duty paid on a deed of adjustment relating to that property made in terms of the Adjustments to Declared Value of Immovable Property Rules;

(v) duty paid on the donation to the transferor of the immovable property in question in terms of the Duty on Documents and Transfers Act, the Death and Donation Duty Act or any law replaced by any of those Acts;

(b) the increase in inflation determined in accordance with rule 8;

(c) improvements to immovable property after acquisition if these are proved to the satisfaction of the Commissioner; the provisions of paragraph (b) shall also apply mutatis mutandis with respect to such improvements;

(d) a maintenance allowance calculated at 0.4% of the value of the building, cost price or cost of completion for every year between the year of acquisition or completion and disposal;

(e) other expenses duly received and directly related to the transfer and not exceeding five per cent of the sale price.

(2) Subject to subrule (4) -

(a) the value of immovable property acquired causa on or after the 25th November, 2003 shall be mortis deemed to be the value as at the time of acquisition of immovable property situated in Malta that was acquired made for the purpose of and in causa mortis accordance with the provisions of the Duty on Documents and Transfers Act not later than six months after the date of the relative succession, without regard to any adjustment to or replacement of that declaration made after the said period of six months, and notice of which has been given to the Commissioner in accordance with that Act by not later than either fifteen working days after the date of the publication of the said deed or the expiration of the said period of six months, whichever is the later;

(b) where the notice referred to in paragraph (a) is given to the Commissioner later than fifteen working days after the date of the publication of the said deed and after the expiration of the said period of six months, the value of the property shall be deemed to be such value which, in the opinion of the Commissioner, represents the price which the property would have fetched had it been sold on the open market on the date of the transfer causa mortis;

(c) a value determined in accordance with paragraph (b) shall be subject to appeal; provided that no evidence shall be considered by the Administrative Review Tribunal as sufficient to warrant any change to the value so determined if the notice referred to in the said paragraph is delivered to the Commissioner more than eighteen months after the date of the transfer causa mortis;

(d) notwithstanding the foregoing provisions of this subrule, where the value of property acquired causa mortis on or after the 25th November, 2003 is the subject of an assessment made under the Duty on Documents and Transfers Act, and that assessment becomes final and conclusive, or is confirmed or amended by a final decision of an appellate tribunal or court or is withdrawn following an agreement in writing with the Commissioner, the value of the property shall be deemed to be the value resulting from the said final and conclusive assessment, decision or agreement;

(e) where, in a final and conclusive assessment made under the Income Tax Management Act, the chargeable gain on a transfer of immovable property that had been acquired on or after the 25th November, causa mortis 2003 is higher than that declared by the taxpayer, and the excess is attributable to a value of the property exceeding the value declared by the taxpayer for the purpose of computing that gain by not more than twenty-five per cent of the taxpayer’s value, that excess shall not constitute an omission for the purposes of article 56(12) of the Income Tax Act, hereinafter referred to as "the Act", if the value declared by the taxpayer is supported by an Perit’s valuation delivered to the Commissioner before that assessment became final and conclusive.

(3) Subject to subrule (4) -

(a) the value at the time of acquisition of immovable property situated in Malta that was acquired causa mortis before the 25th November, 2003 shall be deemed to be the value declared in a notice given to the Commissioner for the purpose of and in accordance with the provisions of the Duty on Documents and Transfers Act not later than the 30th June, 2005, taking into account any adjustment to the said value made in accordance with the Adjustments to Declared Value of Immovable Property Rules, 2005 and delivered to the Commissioner by not later than the 30th June, 2005: Provided that if the said property is transferred after the 25th November, 2004 and before the 30th June, 2005, the value of the property shall be deemed to be the value declared in a notice given as aforesaid not later than the date of that transfer, taking into account any adjustment made in accordance with the said Rules not later than the date of that transfer;

(b) where the notice referred to in paragraph (a) in respect of property acquired before the 25th causa mortis November, 2003 is not given to the Commissioner by 30th June, 2005 or, in the circumstances mentioned in the proviso to paragraph (a), by the date of the transfer, the value of that property shall be deemed to be such value which, in the opinion of the Commissioner, represents the price which the property would have fetched had it been sold on the open market on the date of the transfer causa mortis, and no evidence shall be considered by the Administrative Review Tribunal as sufficient to warrant any change to the value so determined.

(3A) Subject to sub-rule (4), the value at the time of acquisition of immovable property situated in Malta that was acquired by means of a donation shall be deemed to be the value declared in the deed of donation.

(3B) Subject to sub-rule (4), the value at the time of acquisition of immovable property situated outside Malta that was acquired causa mortis or by means of a donation shall be deemed to be equivalent to the price which that property would have fetched had it been sold in the open market at the date of the acquisition.

(4) When the total of the value at the time of acquisition of immovable property that was acquired or by means of a causa mortis donation and the other deductions allowable in terms of the foregoing provisions of this rule exceeds the value at which that property is transferred, the amount that shall be taken as the value of that property at the time of acquisition shall be the value determined in accordance with the foregoing sub-rules of this rule reduced by an amount equivalent to that excess: provided that the value so reduced shall never be less than zero.