What to Know About Property Taxes in Morocco
If you're considering buying property in Morocco, it's essential to understand the various property taxes involved in the purchase, ownership, and eventual sale of real estate. In this blog post, we’ll cover the key property taxes that buyers and owners need to know about to help you plan your investment effectively.
1. Purchase Taxes
When buying property in Morocco, there are several taxes and fees that need to be paid at the time of purchase:
Registration Tax: This tax is typically 4% of the property’s purchase price and is paid when registering the property in your name. This fee covers the cost of recording your ownership with the Moroccan National Agency for Land Conservation, Cadastre, and Cartography (ANCFCC).
Notary Fees: Notary fees range from 1% to 2.5% of the property’s value. The notary acts as a government-appointed official responsible for ensuring that the transaction is legal and that all taxes are paid.
Stamp Duty: In addition to the registration tax, buyers must pay a stamp duty, which is generally 1% of the property's value. This fee is applied to the legal documentation associated with the transaction.
2. Annual Property Taxes
Once you own property in Morocco, there are annual taxes that must be paid to maintain your ownership:
Taxe Urbaine (Urban Tax): This is an annual property tax for properties located in urban areas. The rate is determined based on the value of the property and is generally between 10% and 30% of the rental value of the property. If the property is your primary residence, you may be eligible for a tax exemption for the first five years.
Taxe des Services Communaux (Communal Tax): This tax is levied to fund local services, such as waste collection and road maintenance. The rate is generally 10.5% of the rental value of the property. It is payable by all property owners, regardless of whether the property is occupied or rented out.
3. Rental Income Tax
If you decide to rent out your property, rental income tax is applicable. The rental income tax rate depends on whether the property is leased on a long-term or short-term basis:
Long-Term Rentals: For long-term rental income, a progressive tax rate is applied. The rate ranges from 0% to 38%, depending on the total rental income earned in a year.
Short-Term Rentals: For vacation rentals or short-term leases, the rental income is subject to a flat tax rate of 30%. Property owners must also register with local authorities and ensure they comply with local regulations for short-term leasing.
4. Capital Gains Tax
If you decide to sell your property in Morocco, capital gains tax will apply to the profit earned from the sale. The capital gains tax rate is 20% of the profit, with a minimum tax of 3% of the selling price. However, there are exemptions available:
Primary Residence Exemption: If the property is your primary residence and you have lived in it for at least six years, you may be exempt from paying capital gains tax.
Partial Exemption: If the property has been owned for more than ten years, partial exemptions may also apply.
5. Inheritance Tax
In Morocco, there is no inheritance tax on properties passed down to direct descendants (children or spouses). However, if the property is inherited by a relative outside of the immediate family, taxes may apply depending on the relationship to the deceased.
Understanding the property taxes in Morocco is an essential aspect of making a well-informed real estate investment. From purchase taxes to annual obligations and capital gains, planning for these costs will help ensure a smooth buying experience and avoid any surprises. At Hawazine Property Marrakech, we guide our clients through every aspect of the purchasing process, including understanding and budgeting for property taxes.