Innovative land & property investments
Investment property in Morocco
Buying Guide
Buying costs
Notaries, lawyers and translators
As in other countries such as France and Spain, the notary (notaire) who is responsible for drawing up the contracts, obtaining title deeds and so on is merely a public official appointed by the Government who does not give independent advice, is not really working to your best interests, but simply to move the process on and may not speak English necessitating the presence of a translator.
It is wise to take up the services of a lawyer as well who will advise you, be bilingual and independent of state control.
It is possible, since 2002, for the lawyer to handle the whole conveyancing process cutting out the notary entirely.
Beware that a lawyer is engaged in other business apart from conveyancing, so may not be as clued up as a notary who has been in the business for decades.
Costs and considerations
The additional costs of buying a property in Morocco, new or old, should come to around 5% of the purchase price to include the notary's fee, property registration and all taxes.
An additional cost comes into play if there is no title deed and one needs to be created, this can range between 1.5% and 2.5% depending on the size of the property and the amount of administrative work required in tracking down all the stated owners (if this isn't done they could re-surface in the future and ask for their property back!).
Once the stated owners are found they must sign their consent to the sale going ahead, or offer a thumbprint in the case of illiteracy, this can be straightforward or with an extended, scattered, argumentative family - a drawn out process.
It is also worth noting that without a title deed, it's unlikely that a license of habitation will be granted, leaving you unable to apply for water, electricity or phone lines.
Income tax
With regard to taxation, if your Moroccan property has been purchased as a holiday home, you spend the majority of your time back home in the UK and do not earn your principal income in Morocco or from your property, then you will be classified as a non tax resident.
Any income made from your Moroccan property will have to be declared in both the UK and Morocco; however, the UK tax authorities will deduct any taxes already paid in Morocco.
Capital gains tax
There is a double taxation treaty between Morocco and the UK meaning that Capital Gains Tax (TPI in Morocco) does not have to be paid in both countries.
Capital Gains Tax currently sits at 20% if you sell your property within five years of purchase, going down to 10% on profits over a million Moroccan Dirhams (MAD), (approx 60,000 GBP), after five years and a perfect 0% after ten years.
Rental tax
If the property was purchased with the intention of letting-out, there is no rental tax for five years, by way of a Government incentive, and inheritance tax is wiped out if the property is left to a family member.
Key facts
- It is wise to use a lawyer and translator as the notary (notaire) - responsible for drawing up the contracts and obtaining title deeds, etc. - is a public official who does not give independent advice and may not speak English
- Although the whole conveyancing process can be conducted entirely by a lawyer, notaries are the experts in the field
- Allow 5% of the purchase price to cover notary's fee, property registration and all taxes
- Ensure the property has a title deed: you need it to obtain a license of habitation with which to apply for water, electricity or phone lines
- If there is no title deed, allow 1.5%-2.5% of the purchase price to cover the costs of tracking down the stated owners and creating a new one
- A non tax resident is one who has a second or holiday home in Morocco, spends most of their time in the UK, doesn't earn their principal income in Morocco or from their property there
- Income made from a Moroccan property must be declared in the UK and Morocco, however, any taxes paid in Morocco will be deducted by the UK tax authorities
- A double taxation treaty between Morocco and the UK means that Capital Gains Tax (TPI in Morocco) does not have to be paid in both countries
- Capital Gains Tax is 20% if you sell within five years, 10% after five years on profits over about 60,000 GBP, and 0% after 10 years
- To encourage buy to let purchases, there is no rental tax to be paid for the first five years
- There is no inheritance tax to be on properties left to a family member
Downloadable Reports and Documents
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