Immovable Property in Trust

As per Article 2 of the Trusts and Trustees Act, Chapter 331 of the Laws of Malta (the “TTA”), the property held within a trust can be either a movable or an immovable, such as real estate property. Departing from the standard form of a trust whereby the trust property is held for one beneficiary and any income derived from that property (for example, rent) is for the benefit of the same beneficiary, it is also possible to settle an immovable property for one beneficiary whilst another distinct person benefits from the income on that asset.

It is important to note that one of the purposes of setting up a trust is to manage real estate properties. Mainly, such trust instruments are useful for when an immovable property is yet to be constructed or being altered, as the trustee in a trust would be managing the money for the work in progress. In such instances, the dynamics of the trust work as following:

The beneficiary would be the owner of the property along with the investor (generally the bank) once constructed. For the purposes of administering and managing the property, monies could be placed within the management of the trustee.

For immovable property held in a trust, there could be taxation in the forms of inter alia:

  • Transfer charges;
  • Income tax on capital gains;
  • Stamp duties; and/or
  • Value Added Tax.

Should you require further information on this subject, feel free to contact us.