A new law, the Income Tax (Amendment No. 2) Act 2024, has been passed, updating the Income Tax Act 2010. It introduces a tax on profits from selling certain residential properties in Gibraltar, known as “taxable properties.”
WHAT COUNTS AS A TAXABLE PROPERTY?
- Any residential property in
Gibraltar except:
- Primary residences (homes you live in)
- Commercial properties
- Hotels
- Properties built before 1 January 1988 and owned since then
- Retirement homes
- Churches or religious houses
- Residential properties sold by the estate of a deceased person.
WHEN DOES THE NEW TAX APPLY?
The tax applies only if you:
- Own or hold five or more taxable properties (directly or indirectly), or
- Have owned a total of five or more taxable properties over five consecutive years (basis periods).
A basis period is the tax year (1 July to 30 June for individuals, or a company's accounting period).
The tax starts from 1 January 2025, not the originally proposed 1 August 2024.
IMPORTANT DETAILS ABOUT THE NEW TAX:
- Retrospective Calculation:
- Properties you owned or sold in the five years before 1 January 2025 count toward the “five or more properties” threshold, but sales before 2025 are not taxed.
- Example:
- If you sell two properties in 2024, they will not be taxed.
- But if you sell another property in 2025 (after reaching the five-property threshold), that sale will be taxed.
- Off-Plan Properties Included:
- This applies to properties under construction or not yet built if you sell on the benefit of your Purchase Agreement to someone else before completion with the developer.
- Share Sales Count:
- Selling shares in a company that owns a property is also taxable if the property sale meets the threshold.
- Anti-Avoidance Rules:
- If you transfer property to “connected persons” (e.g., family or related entities) to avoid the tax, those properties still count toward the threshold.
- Future Exemptions:
- The Government may add new property exemptions to the list with Parliament's approval
Key Takeaways:
- If you own five or more taxable properties (or reach this total over five years), profits from selling any of them may be taxed as of 1 January 2025;
- Even if you no longer hold five properties, past ownership in the five-year window still counts; and
- Includes off-plan properties and property share sales.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
