► What are the different types of land ownership in Morocco?
The land situation in Morocco is characterized by a mosaic of land tenure. To simplify the distinction, we first have two main blocks: registered property (title deed) (that is, those with a legally recognized title of ownership and consigned to land tenure), and unregistered property that rely on property documents in the hands of pretending owners, whether they own these properties or not.
1) Unregistered buildings
This category of property is subject to the rules of Islamic law and those of modern common law (the law of obligations and contracts). Properties under this regime are based on so-called "melkia" or ownership documents.
It is a written document prepared by two Adouls and approved by the Cadi, on the basis of the testimony of twelve witnesses (lafif), and after having noted through administrative certificates that the property subject of the request of the "melkia" is not part of common lands or state lands or Habous (religious brotherhood).
This title melkia is therefore the original document of the unregistered property. It describes the location and the measurements of the property concerned, in relation to known geographical or neighborhood registered landmarks, and in the absence of any centralized registration or advertising system.
The properties relevant of this regime are characterized by the difficulty of localization of the properties (their localization’s difficulty) and the certain identification of the owners or the rights holders. In addition, the transactions affecting these assets are sometimes devoid of legal certainty because they are carried out without traceability or registration authenticated by a public entity.
2) Registered buildings:
This regime, unlike the previous one, constitutes the modern and secure framework of real estate property in Morocco. The formation, the establishment and transmission of the rights affecting the assets of this regime, are covered by a set of ancient and modern legal texts that organize and govern in details all the aspects of this regime. In addition to that, the properties of this regime are organized by a registration, conservation and advertising system provided by the Agency of land conservation and registry.
The registered property regime is based on the following principles:
A principle of purge: a definitive registration in the register of property, after the preliminary procedure of verification, of a property or a property right, gives a unique point of departure and makes it possible to purge and to definitively eliminate the property / right of any disputes or claims that did not arise before the closure of the proceedings or were rejected. These alleged rights will be disregarded accordingly, when the building on the Land Register is registered by the conservator of the property.
- A principle traceability of property right: each property will be the subject of a land title and enlisted under a unique number, and on the basis of administrative documents and cadastral plans which delimit the boundary of the property in a precise and scientific way.
-A principle of advertising that allows to mention on the land books, open to the public, listed properties and all new mentions (transmission, charges, judgments affecting these properties) to be known to the public.
The following text is taken from the website of the ADETEF-Alliance Experts in Tradition and Finance (France), Christophe Reuvre, December 2018.
https://www.adetef.fr/investir-au-maroc-maison-appartement.html (vérifier que le lien fonctionne)
"Who has not dreamed of living in a sunny place? A three-hour flight from major capitals, with a stable political regime and a strong banking system, Morocco attracts foreign investors.
Morocco is attractive for a French person or a non-resident European, who can purchase a 200m2
in a residence with pool in Essaouira, or a medium sized Riad in Marrakech, when he could only buy a studio in Paris or in Berlin. Morocco is a largely French-speaking country, but this proximity should not deprive the potential buyer of any discernment.
- 1. Get informed before the acquisition:
It will be necessary to inquire carefully about local uses in order to prepare the procurement process. Once this global vision is achieved, it is necessary to define its objectives (rent, vacation, pure investment) and budget allocated to them.
1.1 Real estate agents:
In principle, the real estate agent only provides an intermediation function that corresponds to 5% of the selling price (2.5% buyer share and 2.5% owner share). He may, however, be given a search warrant with special power of attorney to buy. It is a practice that tends to develop with the increase of foreign buyers.
1.2 Approaches can often be tedious:
Given the local bureaucratic meanders, the best advice is to give a mandate to manage all the necessary administrative procedures, until the notarial act is executed, because the constraints are more or less cumbersome, especially depending on whether you buy in urban or agricultural areas. Acquiring a riad does not require any authorization, except for renovation work, whereas building on a rural area land can become very complicated; in Morocco, a foreigner does not have the right to acquire more than one hectare in agricultural zone, but it is a minimum to obtain a building permit! It is therefore very important to learn about the status of the property and to focus on the urban perimeter or agricultural areas decommissioned when one is not resident.
Likewise, with the exception of new programs, real estate is not necessarily registered in the land register. Generally in the medinas, a majority of real estate are concerned. It is strongly advised to start a procedure of registration carried out on the initiative of the notaries before the acquisition. The process lasts a few weeks but once the registration is obtained, your title of ownership is no longer questionable.
Finally, for the new, the financial guarantee of completion is not compulsory as in France. It is therefore rarely subscribed (contracted). The purchaser will unfortunately have no recourse except to use a personal bonding system.
2. The transaction:
Once you agree on the price and the property, you sign a sales agreement in front of a notary. Even though there are two categories of Moroccan notaries, according to their specialization, their profession isregulated in the same way as that of their French counterparts. The notary is, in principle, the competent editor. On the other hand, it has no powers of intermediation or negotiation between parties: he will have no recourse against a seller who would change his price on the day of signing…
2.1 The price in Dirhams, full amount payment or on credit
The price is payable in dirhams, with notary fees and registration fees of about 5% of the sale price (with variations depending on whether it is new property or not) at the expense of purchaser. The notary is responsible for payment. The applicable law is, of course, the Moroccan law, the law of situation of the building.
In order to pay in dirhams, the non-resident will transfer currencies to Morocco, with funds own or possibly borrowed from a French bank.
In order to pay in Dirhams, the non-resident will need to transfer his own money into the Moroccan currencies, with his own funds or possibly borrowed funds from his country’s bank. As long that he has a property that is considered sufficient to borrow the sum required, the geographical situation of the property will not constitute a cause of blockage. But the loan could as well be subscribed with a Moroccan establishment provided that the property is titled. This option has the advantage of proximity: the bank will be able to guarantee itself on the property more easily. But in this case, But in this case, preference will be given to repayment in Euros to benefit from the guarantee of re-transfer of funds. In addition, Moroccan interest rates are not interesting (more than 4% interest).
Now that the question of financing is answered, it will be necessary to keep track of the importation sums of France and to open a non-resident account in convertible Dirhams with a Moroccan bank.No special conditions are required.
2.2 The retransfer guarantee:
The foreign exchange investment will then be announced to the Moroccan Exchange Office, which will issue a guarantee of re-transfer under the initial import justification. This procedure is necessary to avoid any problem in returning the funds to France. Without this guarantee, the Moroccan government is justified in limiting the export of the proceeds from the sale of a building to 25% of the total each year.
In this case, funds can therefore be partially withheld for four years. In addition, the future buyer will inherit the situation and cannot justify the origin of the amounts also. So why slowing the acquisition of candidates!
3.1 Local taxes
Once an owner, you will incur local taxes in Morocco due to owning a real estate in urban areas: urban tax and construction tax.The urban tax, equivalent to our property tax, affects all buildings and all farms except for new ones, exempted for five years.It is fixed at 10.50% of the rental value of the property (or 6.50% in the urban periphery).The housing tax, the date of construction, is due according to a gradual scale only from the sixth year after completion of the property.
No local taxes are due in rural areas.
3.2 Income Tax
If the owner decides to rent his second house, he or she will pay the Moroccan income tax with regard to the income of its property. In fact, the French-Moroccan Tax Treaty provides that income from immovable property shall be taxable in the country in which such property is situated.
Since January 1, 2019:
- Abolition of the 40% abatement on rents and institution of a discharge rate, thus withheld at the source of the IR by the tenants ... applicable to the gross amount of the rents of:
10% if the annual amount of rent is less than 120,000 dh
15% if the annual amount of rent is greater than or equal to 120,000 dh.
- Exemption for rents whose gross annual amount does not exceed 30,000 dh
The levied tax must be paid online by private tenants or legal persons before the end of the followed month; penalties in case of non-declaration or late payment.
3.3 The French property tax (ISF-Impôt sur la fortune)
The concept of wealth tax being foreign to Moroccan tax law, the tax convention is silent on the subject.
We shall then refer to the rules of French law. A French taxpayer will pay the ISF for all of his or her global properties, including the Moroccan property. Owning a property through a company will not change anything, units must be reported.
3.4 The resale of the property and any capital gains:
The owner of a house in the palm grove of Marrakech, an apartment in Gueliz or a Riad in the medina bought ten years ago is likely to make a profit and pay a capital gain.The French-Moroccan agreement provides that taxes on gains arising from the transfer of ownership of immovable property may be taxed in the State in which they are located, that is, in Morocco. Again, these provisions apply whether the immovable is held directly or through a corporation.
If the rules for calculating the capital gain are similar to those applicable in France, a minimum of 3% of the sale price is payable.This minimum is even due in case of low value! The correct net capital gain which will appear after very high accounts will support a fixed tax of 20% on income tax in Morocco. No tax will be paid in France in this regard.
4. A retirement in the sun, an extensive rental or punctual investment:
Making the growth of your investment is the goal of many non-residents. But above all, this acquisition gives them a chance to retire to the sun, to eventually become residents. In the meantime, the property may be rented for a medium period or on schedule during vacancy periods.
The cost of buying property in Morocco
Whether it is a house, apartment or plot of land, the buyer shall pay the fees and taxes relating to such acquisition.The acquisition costs represent taxes on behalf of the State, they are "transfer taxes", collected by the notary:
- registration fees: 4% of the sale price of the property acquired
- Property conservation: 1 % + 150 dh (75 dh fixed and 75 dh for the certificate of ownership);
- notary fees: from 0.5% to 1%, with a minimum of 3000 dh;
- miscellaneous charges (stamps): from 1,000 to 1,500 dh;
- VAT: 10% of the fees (see price below)
A vacant land with construction commitment within 7 years benefits from a reduced rate of 3%. If applicable, the fee will be 6% and will be as follows:
- registration fees: 6%
- Land conservation: 1% + 150 dh (75 fixed dh and 75 dh for the certificate of ownership);
- notary fees: from 0.5 % to 1%, with a minimum of 3,000 dh;
- miscellaneous charges (stamps): from 1,000 to 1,500 dh;
- VAT: 10% of the fees (see price below).
In accordance with the new schedule established on December 13, 2018, fees applicable to the transaction type are to be applied.
- For the sale of properties whose price is less than or equal to 300,000 dirhams, fees are set at 4,000 dh;
- between 300,001 dh and 1,000,000, dh, Notary Public receives 1.5%;
- between 1,000, 001 dh and 5,000,000dh : 1.25%;
- between 5,000,001 dh and 10,000,000 dh: 0.75%;
- more than 10,000,000: 0.5%.
- For the sale of property with low real estate value, the minimum fee is set at 1,500 dh;
- 3,000 dh for economy accommodation
- 5,000 dh for the average standard.
According to the same text, as soon as the file is opened, the client pays the notary an advance which should not exceed 5%. The minimum amount is fixed at 1,000 dh.
Taxation in Morocco: https://ma.consulfrance.org/Fiscalite-des-ressortissants-francais-3937