"Real Estate in Morocco: Taxes to Which Foreigners Are Subject"
- By Barnes Marrakech
- 20 Octobre 2023
The TPI is the only tax that a foreigner must pay in Morocco when selling their property.
The purchase of real estate in Morocco represents a real investment opportunity for foreigners. However, like in all countries, the real estate sector in Morocco is subject to certain taxes; nevertheless, these remain the same for both Moroccans and foreigners. Indeed, once a foreign national becomes a property owner, two local taxes are due in Morocco due to the ownership of real estate in urban areas: the urban tax and the edility tax. The urban tax applies to all constructions and operations, excluding new constructions, which are exempt for five years. The habitation tax, or edility tax, is an annual urban tax due by anyone owning real estate intended for primary or secondary residence.
Note that if the payment deadline for the habitation tax is exceeded, the owner may be subject to a penalty of 10%, an increase of 5% for the first month of delay, and an additional increase of 0.50% per month or fraction of an extra month. It is important to mention that the habitation tax can be paid at the designated collection point indicated on the tax notice or online on the website www.tgr.gov.ma.
Additionally, there are also registration fees that a foreigner is subject to when purchasing property, as detailed in our recent post.
Taxes to be Paid When Selling Property in Morocco
The sale of real estate in Morocco is often an opportunity to make substantial capital gains. The question then arises regarding the taxation of these real estate gains. Whether one is a Moroccan resident, a Moroccan residing abroad (MRE), or a foreigner, the same tax applies, the TPI or tax on real estate profit. It applies to the sale of various properties such as villas, apartments, commercial premises, or even land. The TPI generally has a rate of 20%, such as in the case of the sale of immovable properties (apartments, villas, riads, etc.) and agricultural land. This rate increases to 30% for undeveloped land in urban areas. However, there are conditions for exemption from the TPI on properties in Morocco.
Here are some cases in which it is currently possible to be exempt from the taxation of real estate gains, also applicable to foreigners: The sale occurs between spouses, between ascendants and descendants of the same family, or if the property sold was the seller's primary residence for at least 6 years.