When non-resident foreigners own real estate in Morocco, they need to consider the tax implications that arise from their property ownership. 

According to Article 23 of the Moroccan General Tax Code, individuals who do not have their tax domicile in Morocco are subject to income tax on their total income and profits from Moroccan sources. Additionally, they may be subject to taxes on profits or income that fall under Moroccan taxation as per double tax treaties related to income taxes.

In most cases, double tax treaties pertaining to income taxes specify that rental income and gains from the sale of real estate should be exclusively taxed in the country where the property is located. 

Therefore, taxes related to real estate in Morocco, including rental income, capital gains, and local taxes, must be paid in the country.

Here are the key tax considerations for non-resident foreigners owning real estate in Morocco:

1. Income Tax : 

If you earn rental income from your Moroccan property, you are required to pay income tax on that income. The income tax rates are progressive and vary based on the taxable income brackets. Deductions are applied before calculating the tax liability.

Taxable Annual Income Brackets (MAD)	Taxe Rate	Deduction Amount
0 to 30 000	0 %	–
30 001 to 50 000	10 %	3 000
50 001 to 60 000	20 %	8 000
60 001 to 80 000	30 %	14 000
80 001 to 180 000	34 %	17 200
Above 180 000	38 %	24 400

2. Capital Gains Tax : 

If you sell a property in Morocco, you may be subject to capital gains tax. This tax is applied to the profit realized from the sale, which is calculated as the difference between the selling price and the acquisition price. The capital gains tax rate is fixed at 20%.

3. Local Taxes : 

Owning real estate in Morocco also entails local taxes. The Housing Tax is an annual tax imposed on residential properties occupied by owners or made available to family members. The tax rate is determined based on the rental value of the property. 

Additionally, the Communal Services Tax is levied based on the property’s location and is also calculated using the rental value.

It is important to note that certain exemptions and deductions may apply to mitigate tax obligations, such as specific thresholds for exemptions or reductions for primary residences and certain types of property transactions. 

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+212 5 22 26 59 90

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Disclaimer : 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.

Can Foreigners buy Real Estate in Morocco ?

Yes, foreigners, both residents and non-residents, have the opportunity to buy real estate in Morocco.

However, there is a restriction on the acquisition of agricultural lands. Foreigners are not allowed to buy agricultural properties in Morocco. This restriction is in place to preserve agricultural resources and ensure that land intended for farming remains in the hands of Moroccan citizens.

Nevertheless, there is a provision in the law that allows foreigners to acquire agricultural properties if the purpose is for non-agricultural investment projects. In such cases, foreigners can obtain a non-agricultural vocation certificate, which grants them permission to use the agricultural land for non-agricultural purposes. 

Can Foreigners Transfer Money from Real Property Sales in Morocco without Restrictions?

According to the rules set by the Moroccan General Instruction for Foreign Exchange Operations, when the acquisition is financed by a foreigner using foreign currency deposited in a convertible dirham account with a Moroccan bank, it is possible, upon resale of the property, to convert the received price in Moroccan dirhams into foreign currency and transfer the funds out of Morocco as a whole, provided that the origin of the funds is justified during the acquisition process. Of course, all Moroccan taxes must have been paid in advance.

However, if the acquisition wasn’t financed with justified foreign currency, the foreigner can carry out this exchange operation and transfer the price abroad, but, only in increments of 25% per year, starting one year after the sale, over a period of four effective years.

On the other hand, rental income generated from the property can be transferred without any limitations on the amount or timeframe, regardless of whether the property was financed in foreign currency or Moroccan dirhams. This means that foreigners can freely transfer the rental income they earn from the property out of Morocco, without any restrictions.

Can Foreigners Obtain Mortgage Loans from Moroccan Banks for Real Estate Acquisition?

The acquisition of real estate can be partially or fully financed through a mortgage loan from a Moroccan bank.

However, foreigners who intend to finance their real estate acquisition in Morocco through a mortgage loan from a Moroccan bank should note that they can convert the proceeds from selling the property into foreign currency and transfer the funds out of Morocco without restrictions if the loan amount does not exceed 70% of the property’s price and the remaining portion is financed in foreign currency.

How can I protect myself when making down payments or security deposits in a real estate transaction ?

When making down payments or security deposits in a real estate transaction in Morocco, it is crucial to take certain precautions to protect your interests. Here are the key precautions to consider :

1. Verifying Property Ownership: Before making any payments or entering into a real estate transaction, it is crucial to verify the ownership of the property. Conduct thorough due diligence and obtain official documentation, such as property deeds or land titles, to confirm the seller’s legal ownership rights. 

2. Involving a Notary : It is highly recommended to make the payments through a notary. This can be done by depositing the funds with the notary, who will securely hold the money and release it to the seller only after the completion of the sale. This method provides an extra layer of security as the funds are held by a neutral and trusted party.

3. Establish a Preliminary Agreement : It is advisable not to make any payments to the seller without first establishing a preliminary agreement, such as a sales agreement, in which the notary records the funds and specifies the conditions for reimbursement in case the sale does not go through as planned.

4. Verifying Powers of Attorney : If the seller designates a representative to handle the transaction and receive payments on their behalf, it is essential to verify the validity and specificity of the power of attorney. Ensure that the power of attorney is recent, explicitly granted for the specific purchase transaction, and authorized by the seller.

Contact Us for Professional Real Estate Consulting Services

We can provide guidance and assistance throughout the entire process of acquiring real estate in Morocco. Our team can offer expert advice to help you make informed decisions and choose the best options suited to your needs.

From reviewing property listings to conducting due diligence, negotiating contracts, and navigating the necessary paperwork, our firm can provide comprehensive assistance at every stage. 

Our goal is to protect your interests, minimize risks, and facilitate a successful real estate acquisition in Morocco. 

Feel free to reach out to our advisory firm for dedicated legal support and assistance throughout your journey of acquiring real estate in Morocco.

+212 5 22 26 59 90

info@mkonsulting.ma

Disclaimer : 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.

A new Federal Decree-Law No. 41 of 2022 on Civil Personal Status of all non-Muslim to be enforced from February, 2023.

Which people are concerned by the new federal personal status law ?

The new Federal Decree-Law No. 41 of 2022 governs the following :

• Non-Muslim citizens of the UAE
• Non-Muslim expatriates and residents of the UAE, unless one of them insists that the law of their own country be applied in matters related inheritance and wills.

What does the new law say on matters of wills ?

With the new law, Non-Muslims will be allowed to give their assets to anyone they wish. 

Also, the new legislation allows for both spouses to complete a will registration form while finalizing their marriage contract, outlining the distribution of their assets in the event of their death.

What is stated in the new law regarding inheritance ?

Law No. 41 deals the determination of Inheritance for non-Muslims and removes the traditional default distribution which includes an unequal distribution between males and females.

Under the reforms, in the absence of a valid Will : 

• Half (1/2) of the estate shall be inherited by a surviving spouse.
• Should the deceased leave any surviving children, the remainder of the estate shall be distributed equally among the children with no differentiation between males and females. 
• In the event that a deceased leaves no children, the estate shall be divided equally to the surviving parents.
• Should only one parent remain, the estate shall be distributed equally between said parent and surviving siblings of the deceased, equally. 
• In the event where both parents have passed away, the estate shall be divided equally, amongst the surviving siblings, with no distinction between brothers and sisters.

Contact Us

+212 5 22 26 59 90

info@mkonsulting.ma

Disclaimer : 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.