CAPITAL GAINS ġ S.L.123.27 1
SUBSIDIARY LEGISLATION 123.27
CAPITAL GAINS RULES
25th November, 1992
LEGAL NOTICE 102 of 1993., as amended by Legal Notice 379 of 2002.
Title.
Computation of 
gains.
2. 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:
Cap. 364.
(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; 
Cap. 239.
Cap. 364.
(ii) the value of property transferred  causa mortis  or
inter vivos  based on the assessed amount relating
to the return of chargeable property for the
purpose of the Succession and Donation Duties
Ordinance, the Death and Donation Duty Act, or
to the return of a transfer  causa mortis  for the
purposes of the Duty on Documents and
Transfers Act;
(iii) any expenditure proved to the satisfaction of the
Commissioner to have been wholly and
exclusively incurred in developing the property
being transferred;
(iv) death duty paid in respect of property referred to
in sub-paragraph (ii) of this paragraph. The duty
attributable to the property transferred shall be
ascertained as follows:
(1) where the duty refers to property inherited
prior to the 1st January, 1974, by multiplying
the duty paid on the estate by the proportion
which the amount of the assessed value of
the relative property bears to the assessed
value of the whole estate;
(2) where the duty refers to property inherited as
from 1st January, 1974, by multiplying the
duty paid by a person in respect of his
relative portion of the estate by the
proportion which the assessed value of the
relative property bears to the assessed value
of the said portion of the estate;
2 ġ S.L.123.27 CAPITAL GAINS
(v) donation duty paid on the property transferred;
Cap. 158.
( b ) in respect of property acquired after the 31st
December, 1992, the increase in inflation resulting
from the index of inflation established in terms of
article 13 of the Housing (Decontrol) Ordinance by
taking the year 1992 as a basis year;
( 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 made after 31st December, 1992;
( 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.
Allowable 
expenditure.
Cap. 123.
3. In determining what expenditure is allowable there must be
excluded any sum which has been allowed as a deduction for the
purposes of Part IV of the Income Tax Act or otherwise as a
deduction against income under any other Part of the Act other than
article 5 of the Act. 
Chargeable gain. 4. (1) The chargeable gain on transfer of immovable property
acquired before the 1st January, 1992 shall be determined as that
proportion of the whole gain which the period between 1992 and
the date of transfer bears to the whole period of ownership on the
following formula:
where:
VT =  value at time of transfer
CA =  cost of acquisition of property transferred 
YD =  year in which property is transferred
YA =  year of acquisition of property transferred being the year of
purchase or the year of completion, whichever is the later:
Provided that where the property was transferred between
the period 25th November, 1992 and 31st December, 1992 the
chargeable gain shall be computed on the following formula:
where:
n = number of days between the 25th November, 1992 and the
date of transfer.
(2) Where after the acquisition of the asset there is additional
VT-CA X YD-1992 
1 YD-YA
VT-CA X 1 X n
1 YD-YA 365
CAPITAL GAINS ġ S.L.123.27 3
expenditure on improvements amounting to at least 10% of the sale
price, the chargeable gain shall be first allocated to the original cost
and to the subsequent expenditure and then time apportionment
shall be applied to each part separately.
(3) Where the additional expenditure is incurred after 1992 the
gain attributed to this additional expenditure will not be subject to
time apportionment as indicated in sub-rule (2) of this rule:
Provided that the provisions of paragraphs ( b ) and ( d ) of
rule 2 of these Rules shall be disregarded for the purposes of this
rule.
(4) Notwithstanding the preceding provisions of this rule, any
person may opt by notice in writing to the Commissioner that
chargeable gains on transfer of immovable property acquired
before the 1st January, 1992 be computed as laid down in rules 2
and 3 provided that -
(i) the inflation index referred to in paragraph ( b ) of
rule 2 in respect of the cost of acquisition of the
immovable property shall start from the date the
property was acquired; and
(ii) the provisions of paragraph ( b ) referred to in
paragraph ( c ) of rule 2 shall apply with respect
to improvements made after the date of
acquisition of the immovable property.
Transfer of 
company shares.
5. Where the transfer consists of shares pertaining to a
company which owns assets in the form of immovable property, the
immovable property shall, at the date of transfer of shares, be given
a market value certified by an appraiser, architect or other valuer.
The market value of such property, which shall be taken as the cost
of acquisition, and be time apportioned to the year 1992 shall be
determined as follows -
where: 
OC =  original cost of acquisition of property 
VT =  value of property at time of transfer
YA =  year of acquisition of property being the year of purchase
or the year of completion, whichever is the later
YD = year in which the shares are transferred.
Notary to collect 
provisional tax.
Amended by:
L.N. 379 of 2002.
Cap. 372.
6. (1) The provisional tax payable in terms of article 43 of the
Income Tax Management Act in respect of immovable property is
to be collected from the vendor and, or, transferor by the notary on
publication of the relative deed of transfer. This payment is to be
made by means of a bank draft or a cheque drawn by the notary
who published the transfer deed payable to the Commissioner of
Inland Revenue:
Cap. 123.
Provided that no provisional tax shall be collected by the
notary where the parties declare on the deed that the provisions of
article 5(5)( b ) of the Income Tax Act apply to them.
OC + VT-OC X 1992-YA1 YD-YA
4 ġ S.L.123.27 CAPITAL GAINS
S.L. 364.10.
(2) The bank drafts or cheques are to be presented with the
notice contained in the First Schedule to the Duty on Documents
and Transfers Rules, and the notice shall be presented in duplicate.
One of the notices shall be stamped by the Commissioner in
acknowledgement of the receipt of the same notice and of the draft
or cheque, and shall be returned to the notary to be annexed to the
relative deed.
(3) In calculating the provisional tax payable by the vendor
and, or, transferor, the resulting amount is to be rounded down to
the nearest lira. This rounding down may be made in respect of
each vendor and, or, transferor if there is more than one vendor or
transferor on the particular deed of transfer.
