Govt publishes property tax Bill

The Gibraltar Government has published draft legislation to introduce tax profits derived from residential property sales where the owner holds three or more properties, excluding their primary residence. 

The measure, which also applies to off-plan properties and those indirectly owned including via trusts or companies, was first announced by Nigel Feetham, the Minister for Justice, Trade and Industry, during the Budget debate. 

At the time, Mr Feetham said the purpose of the measure was to provide “clarity and certainty” in taxation of property sales that generated income for many people but often regarded as being outside the tax regime. 

He said the change in the law would leave no doubt that such profits were taxable, without the need to resort to costly enforcement action. 

It was aimed at “investors who treat our property market like a stock market”, he said at the time. 

When it was first announced, the measure raised concern in the real estate sector that it could dampen investor interest in Gibraltar and lead to unintended consequences. 

Investors are often key to financing new developments in Gibraltar and the fear is existing investors may be punished by a measure akin to capital gains tax. 

The Bill to introduce the measure has yet to be presented to Parliament and will be debated after the summer. 

But on Friday, Mr Feetham was clear that his intention was to push ahead with it. 

“While a few wealthy property speculators - those who buy large numbers of properties off-plan from developers, depriving local buyers and driving up prices - might not like it, we believe this is the right step forward,” he said in a post on social media. 

“These individuals seem to think they shouldn’t pay tax in Gibraltar, unlike everyone else.” 

“Some people have tried to persuade me to impose tax on ordinary people buying properties instead of wealthy speculators. Others have suggested ways to avoid the tax entirely.” 

“They needn’t have wasted their time. They will pay the tax under this Bill.” 

“The majority will understand our goals and welcome this measure.” 

“I will address Parliament with more details, including any abuses we have observed in the market.”