|
||||
 |
||||
 |
|||
|
 |
Morocco makes a stand | |
|
|||
|
 |
|
|
Tax advantages and buyer protection | |
| Click on the picture for more images | |
|
  |
||
|
|||||
 |
|
The real estate market in Morocco has, for a few years, welcomed a buzz, which did not occur by mere chance. In fact, there are many reasons to explain this boom (a mild climate, welcoming locals, it’s proximity to Europe) but also tax advantages and a legal package well adapted to investors’ needs, as well as clear and adaptable foreign exchange regulations.To discuss these topics, we met with Mr. Boulmane, a solicitor in Marrakech,who sums up these points for us. Sun Residences: once a property is bought, what taxes is the buyer subject to? Mr. Boulmane: Upon becoming a property owner, the buyer is subject to 2 taxes:• urban tax, mainly due on property developments whose owners are using them as principal or secondary residences, or graciously making them available to their spouse, parents or children. This tax is calculated on the basis of the building’s rental value. The rate varies between 10% and 30% depending on the rent. New buildings are exempt from this tax for a 5-years period following their completion. Buildings that owners chose as their main residence benefit from a 75% discount from the rental percentage value. • council tax (refuse collection and collective utility maintenance) is calculated on buildings within the urban tax catchment area, including the temporarily exempt buildings. This is calculated on the rental value: 10% of this value for buildings located within “urban” area, and 6% for buildings located in “countryside” area. SR: what about tax on rental income and on capital gain? MB: in the case of renting, the owner is subject to income tax because of the rental income. The aforementioned interests are exempt from income tax incurred from the rental of new and/or additional buildings for a period of 3 years after their completion. The owner then benefits from a 40% discount on the gross amount of his/her income. The remainder is subject to a progressive scale, from 0% to 42%. In the event of a sale, capital gain is taxed at 20% with a minimum of 3% of the sale price.SR: speaking about selling, how can one repatriate one’s capital? MB: for foreign buyers whose purchase price and fees are paid in foreign currencies transferred from abroad, their investment is, via the solicitor in charge of the transaction, registered with the foreign exchange office which, in the instance of the sale of the acquired goods, grants them the guarantee of repatriating the funds to their home country. SR: what about buyer protection when they buy a newly built property? MB: to meet the expectations and worries of foreign investors, the legislator created a set of laws (Law n°44-00 of 3 October 2002, effective from 7 November 2003) which define and clarify the sale of a building to be complete at a later stage. This law relies on 2 main elements: the preliminary contract and the final contract.• the preliminary contract: this first draft is compulsory, any other commitment to buy or sell is void. It takes place once the ground floor foundations of the building are finished. This is the most important stage in the buyer’s commitment. This preliminary contract must include mandatory principles and notably specify the building named in the contract, the delivery schedule, the price and payment methods, the refund guarantees for the amount paid in the event of any setbacks by the real estate developer (Refund guarantee: For the benefit of the “buyer” at the time of signing the preliminary contract, “the seller” must establish one of the refund guarantees outlined in Article 618-9 of Law n° 44-00, which is an insurance (banking or otherwise) or a security deposit in order to guarantee the refund of the amount already paid, in the event that completion of the work would be impossible.), the co-owner rules as well as the specifications containing the building’s technical specifications, services and utilities. These specifications must be signed by all parties and a certified true copy of the original given to the buyer.• the final contract: The transfer of ownership of the sold building must take place after the conclusion of a final agreement and its registration in the land registry. The signing of said contract occurs after full payment of the price, completion of the work and acquisition of authorisation to live in the building, subject to the first-draft agreement. At that time, the buyer shall benefit from the guarantee against hidden defects (1 year after delivery) and a 10-year warranty following completion of the work. SR: to sum up, does Morocco do its best to favour real estate investment? MB: yes, and in addition I would add: no succession rights, bilateral tax agreement between Morocco and many countries so as to avoid double taxation, etc... It seems that everything is done to secure and develop loyalty among the numerous foreign investors interested in Morocco. It is becoming a key player on this side of the Mediterranean and a direct competitor to other Mediterranean countries (France, Spain, ...). A new Act on tourism real estate rental is soon to be voted on. Here are its main points: • To entrust the management, for a period of at least nine years, to a single licensed management company owner, who must be appointed by the promotion company prior to the sale. • Nonetheless, the buyer reserves the right to the personal use of his/her home for a period of no more than two months per year, with two weeks in peak season. To avoid unexpected surprises, the legislator imposed some rules upon the management companies:
It is likely that tax incentives will go in-hand with this project. Some real estate developers already offer up to 8% income on tourism real estate investments.
|
|
|
 |
 |
||
|
• Month events
• Subscribe to the Golf newsletter |
 |
|
||
|
|
