Morocco Property Buyers Guide

Purchase procedure.

The purchase is a standard procedure, similar to anywhere in Europe.

The Azur Program in 2001 by the Moroccan government to increase the number of tourists in the country, has given rise to a lot of property developments in the country, especially in the North.

Buying off-plan is always attractive in terms of purchase price, but there are risks involved that every investor should be aware of. The requirements to make the contract valid under Moroccan law are found in a Law dated 3rd October 2002, which came into force on the 7th  November 2003. This law was created to protect buyers from fraud and to put an end to the “black market”.

This law is very protective for the buyer’s, for example; the law states that the preliminary contract can only be drawn up by a “Notaire” or a Moroccan Lawyer after the completion of the foundations. The developers also have to provide a bank guarantee to secure purchasers investments. Payments have to me made in stages (unless otherwise agreed by a written agreement) as followed:

-Following completion of the foundations and ground floor

-Following structural completion

-Following completion of the finishing.

This law has been criticized by the developers in Morocco as being too “harsh”, and not everyone is applying strictly the law.

In order to avoid any surprises, always ask independent legal advice before signing anything.

Standard Purchase Procedure- Off Plan Property.

Reservation Fee - This is required immediately to reserve the unit(s) and freeze the price. The required reservation fee depends on the unit you choose, the developer and the development, but typically is around € 3,000.

Deposit - After 30 days, the balance of the deposit is due this can be up to 40% of the cost of the property.  Although 40% is common various developers and developments may require different deposit payment percentages. They may also require interim stage throughout the construction process. You will need to ensure you fully understand exactly what payment structure is in place before committing to a property purchase in Morocco.

Completion - Upon completion, the remaining balance is payable. Some buyers will look to finance this; mortgages of up to 70% are available in Morocco. The purchase price is inclusive of VAT in Morocco. The payment of the balance will be done in the Moroccan legal currency, Dirham. This is not a fully international convertible currency yet, and no import of Dirhams is allowed, so as a non-resident buyer you must open a bank account at a Moroccan Bank. You can then send funds in foreign currency, which will then be converted to Dirham and serve to make payments to the seller or to the “Notaire”.

Completion is when the final deed of sale is signed and legal ownership is transferred to the buyer. It is also at this point that any extras such as the Notaire’s fees, taxes & duties are due. The monies will be paid directly to the bank and the Notaire.

It is recommended that you attend in person at the Notaire’s office for the signing & witnessing of the deed of sale. However, if this is not possible the buyer may invoke a Power of Attorney certified by the Moroccan Consulate. Documents for use in Morocco require legalization by the Moroccan Consulate and must be certified by the UK Foreign & Commonwealth Office.

There are no title deeds as such in Morocco and proof of ownership is provided and guaranteed by registration of the property at the Land Registry. The Land Registry’s stamp is put on the deed of sale and the Notaire gives a certified copy to the buyer around two months after completion of the sale. Until you receive such copy, the Notaire will give you a certificate of ownership that proves that you are the owner of the property. You can use this document to connect your house to electricity and water, and even to sell your property.

Appointing a Lawyer.

As always when purchasing any property abroad Arena recommends that you engage an independent lawyer to handle the conveyancing side of your purchase.

Your lawyer should be fluent in both your language & the one of the country in which you are purchasing, in this case Morocco. Your lawyer can then carry out all of the legalities for your purchase as well as the many necessary checks on the property before you proceed to the private purchase contract & pay the balance of your deposit.

If you prefer Arena can recommend an experienced local lawyer at the time of your purchase.

Purchase Costs.

As a general rule you should expect to pay around 6.5% of the property price. This covers lawyer’s fees, notary costs and registration.

Annual Fees & Taxes.

The Morocco tax system is modelled after the French system and has quite a few complexities. You should always consult and work closely with an international tax advisor prior to your purchase. The following information is a very basic guide to the Morocco tax implications for UK investors:

Annual Taxes

PERSONAL INCOME TAX ON RENTAL INCOME (IGR) UK investors utilizing a buy let strategy will be responsible to pay tax on this income. In Tangier 60% of this income is taxable at 22% (other parts of Morocco are taxed at 44%). The city of Tangier has a 50% reduction on rental income tax adding yet one more advantage to invest in Tangier.

There is also a three-year exoneration for the first three years the property is owned.

PROPERTY TAX (Taxe Urbaine) (Personal vacation home option) Property taxes are paid annually. The first five years owners have full exoneration (Property agencies are NOT included). After 5 years the tax is based on the property's annual rental value.

This is done with a graduated tax table:

There is a 75% discount if the home is your permanent or vacation home residence.

PROPERTY RENTAL TAX (Taxe Urbaine) (Investor option) Investors pay 13.50% on the rental value of the property.

GARBAGE COLLECTION TAX (Fiscalite des collectivites locales)There is a 5 year exoneration from the garbage collection tax. Tax is levied at 10% of the property's annual rental value.

Taxes upon Selling

CAPITAL GAINS TAX (Taxe sur les Profits Immobiliers - TPI)Capital gains tax is 20% of profit with a minimum of 3% of the sale price. TPI is based on the sale price less the purchase price.

Purchase price includes the following:

The second option in calculating the purchase price is to just add 15% to the purchase price. This option is often used in the case that invoices are not available to justify the expenses.

Immunity from Capital Gains Tax.

UK-MOROCCO Taxation Treaty. There is a double tax treaty between the UK and Morocco that ensures investors do not suffer Capital Gains tax in both countries.

CORPORATE TAX. If you intend to purchase a number of Moroccan properties it may well be worth considering establishing a Moroccan Private Limited Company –The private limited company (SARL) (Set-up time is about 3 weeks).

The SARL is an intermediate type between associations of persons and of capital, bearing resemblance to both partnerships and share companies. It is always a trading company, regardless of its corporate name and its minimum equity capital is 100,000dh. It may be formed by two or more members who are only liable to the amount of their share of the equity capital in the company. Unlike a general partnership, members of a private limited company do not need to be registered merchants.

The private limited company must file a memorandum of association as part of its incorporation process. The capital stock has to be fully described and paid up as the company is formed. Stocks shall have the same face value and are not negotiable; they may be transferred only through contracts. "Parts Sociales" may be transferred to third parties outside the company only with the co-associates' consent.