Nadia Sadak,  Sunday, 3 November 2013

 

This article is part of a series of 8 articles about buying property in Morocco. The other articles in the series cover the following topics:

Property Buying Guide
Finding the Right Location
Role of the Real Estate Agent
Buying Process
Documents and Contracts
Costs
Mortgages

The taxes to be paid when purchasing a property in Morocco should be well analysed, that way buyers, sellers and also the government would not have to face any issues during the transaction and property transfer. There are a few taxes that need to be paid following the correct order of purchase. The first tax that you should pay once you are buying a property in Morocco is called the Complete Due Diligence. It is important to keep in mind that all taxes when buying a house should be paid by the buyer, never by the seller or even the government or any other entity like it may happen in some countries. All of the below taxes are the taxes on the sale of every property.

1. Complete Due Diligence
   At the cost of MAD 75 the Complete Diligence must be completed by a notary. This document will be proof that who sells the property is not in any state of insolvency, receivership or even liquidation. The notary will then verify whether there is any open file that is proof that the land is under rental or even truly owned by the seller. In case there is no issue on this step you may move to the next one. The process usually takes a single business day to have its completion done.
2. "Attestation Fiscale" from Regional General Tax Authority
   This second step on the process usually takes up to 15 business days and has its value vary from place to place. Here the buyer will be able to know whether the property he intends to buy is due with its taxes before the tax collection authority. In case there are any sort of outstanding taxes it is the obligation of the notary to be sure that the transaction money will be enough to pay off such debts. Such act is mandatory.
3. Tax Clearance Certificate/Municipal Tax Authority (Urban Tax)
   Before someone has a new property transferred under his name it is a must that this type of tax is paid. It is under the responsibility of the notary that the property is checked before the process is completed. The process usually only takes 2 business days (or less) and has its cost vary from region to region.
4. Council or Local Tax
   Proof that the supplementary urban tax was paid by the seller before selling a property must be provided. The values that should be paid are based on the rental value of each and every property.
   10% of rental value if in urban districts.
   6% of rental value if in outside the urban districts
5. Sales Contract signing/ Authentication by Official Notary
   This process usually takes no more than a single business day and costs from 0.5% to 1% of the total transaction value. Extra notary fees also must be paid. The fee value is around 600 dirhams in stamps (around 20 dirham per page, 5 pages usually, 6 copies). Such documentation must include the sales agreements signed by both parties, IDs of each party and also an extra 10% of the VAT on notary fees. The VAT (Value Added Tax) , which is a type of consuming/ transactions tax.
6. Registration before the Regional Tax Authorities
   This part of the process is usually the slowest one, taking around 30 days until is completion is released. The cost of this tax is 4% of the total value of the property.
7. FinalTax Clearance from the Regional Tax Authority
   Usually done in a single day and under different values, this step of the process shows that the seller cleared all of his taxes.
8. inscription of the land on the Land Registers
   This process may take up to 3 business days and usually costs MAD 75 and 1% of property value and 450 MAD for the stamp duty.

The Capital Gains Tax

Every individual earning money from selling their property has the obligation to pay certain amount of tax on property profits. The sale of property is taxable at 20% of any profit being that 3% of the sale price must be paid. However if the property sold was the residence of the taxpayer he will not be subject to taxes under a few qualifications:

the property was the residence of the taxpayer for 8 years at the least
if the property does not exceed 100 square meters and the profit, profit did not exceed MAD 250,000 and the property was the residence of the taxpayer for at least 4 complete years

Yearly Property Taxes

Such tax applies to buildings of all kinds, including buildings that are partially occupied by their owners. Whether it is the main home or the second home, everyone must pay the Yearly Property Tax. Whether the property is for business purposes or residence properties, every owner must pay tax. The urbane taxes differ from the type of land. Plots of land pay 3%, buildings 4% among others. The first 5 years that the owner has a house he will have the opportunity to have full exemption for 5 full years. After these 5 years are done the property tax is based on the annual rental value of the property, and there is still a 75% discount if the property is the permanent home of the taxpayer in all places in Morocco.