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Morocco Frequently Asked Questions
PROPERTY AND TITLE
Q: Is there any bank guarantee regarding payments made to developer?
A: Under Moroccan law, there is no obligation on the part of the Vendor to guarantee the amounts
advanced towards the purchase of a property acquired off plan.
There is, however, a law of October 2002 that has come into force in November 2003 that contemplates
the sale of off plan properties with a system of bank guarantees. The law compels the vendor to
guarantee the funds advanced by the buyer. Unfortunately, given certain lack of clarity of the law, it is
generally not applied by developers.
Q: Is there in the private contract an inbuilt guarantee that a good and clean title will be provided by the Moroccan Government should promoter fails to pass on the title to the developer?
A: This is a contractual undertaking between the original promoter of the whole site and the Moroccan
Government stating that should the promoter go bankrupt or for any reason fail to pass title to
promoter’s buyers, the Government will pass directly the title to the developer.
Q: Is the property freehold?
A: Yes, the properties are owned on a freehold basis. Individual titles will be given on completion of the
construction and delivery of the property by way of a Title Deed registrable at the local Land Registry
(Conservation Foncière de Berkhane).
Q: What happens should the development be delayed more than 21 months after the granting of the construction licence. Do I have the option of cancelling the contract, say if it is still not built in 2011?
A: Delays may occur when you are buying off plan and most of the times, as is the case in Morocco, the
contract provides for a period of grace to complete the property without having to compensate the
buyer. In this case, the grace period beyond the contractual date for delivery is of 6 months. Any other
delay thereafter will be subject to compensation, except in cases of Force Majeure or Acts of God, where
no compensation can be sought (unexpected weather conditions, lack of delivery of some materials
follow a strike or a lack of supply).
Q: What will be the maintenance charge after completion?
A: It is too premature at this stage to obtain a quote due to some extent to the final number of services
that are going to be included and to the fact that a more accurate price will be established close to the
time of engaging them.
Q: Is the 50 years permit equivalent to a leasehold?
A: No, it is a form of ownership in which property is transferred into a fideicomiso for the benefit of the
real owner or beneficiary. Therefore it does not result in a depreciation of the asset or the payment of a
high premium as is the case of a leasehold property.
PAYMENTS AND TAXES
Q: What happens in case of a delay in transferring the first 20% down payment?
A: Payments must be made within a reasonable period of time after signing the reservation agreement
and as close as possible to the dates estimated for exchange of contracts as stipulated in the reservation
document.
However if delays occur due to transfers between banks or to arrangements to obtain liquid funds, etc
one must notify the developer and the lawyers of the
Estimated time of delays and ensure that the payment(s) is(are) made as soon as practically possible.
Q: What taxes do I need to pay on an on going basis as owner of property in Morocco?
A: The Moroccan government is eager to encourage foreign investments and a number of tax exemptions
or advantages are offered to buyers.
As a non-resident, your typical tax liabilities will be:
Urban Property Tax: Owners of real estate are subject to urban property tax calculated on the annual rental value of the property (either achieved or otherwise estimated). The tax rate follows a sliding scale ranging from 10% to 30% on rental income ranging from 3,000.00 to 60,000.00 Dirhams and above and offers also further tax rebates again on a sliding scale. Owners in Morocco benefit from Urban Tax exemption for the first 5 years following the licence of first occupation.
Communal Tax: Owners of real estate are also subject to a Communal Tax (Taxe dÉdilité) calculated on the annual rental value of the property (either achieved otherwise estimated. There is a flat tax rate of 10% payable the year following the licence of first occupation.
Additional tax: Owners of real estate are subject, in addition to the above taxes, to a supplementary tax calculated on both the Urban Property Tax and the Communal Tax. The tax rate is fixed at 5% of the Communal Tax. We can provide you with a separate booklet detailing all the taxes including the mechanics of Capital Gain Tax on the sale of the property.
As a non-resident, your typical tax liabilities will be:
Urban Property Tax: Owners of real estate are subject to urban property tax calculated on the annual rental value of the property (either achieved or otherwise estimated). The tax rate follows a sliding scale ranging from 10% to 30% on rental income ranging from 3,000.00 to 60,000.00 Dirhams and above and offers also further tax rebates again on a sliding scale. Owners in Morocco benefit from Urban Tax exemption for the first 5 years following the licence of first occupation.
Communal Tax: Owners of real estate are also subject to a Communal Tax (Taxe dÉdilité) calculated on the annual rental value of the property (either achieved otherwise estimated. There is a flat tax rate of 10% payable the year following the licence of first occupation.
Additional tax: Owners of real estate are subject, in addition to the above taxes, to a supplementary tax calculated on both the Urban Property Tax and the Communal Tax. The tax rate is fixed at 5% of the Communal Tax. We can provide you with a separate booklet detailing all the taxes including the mechanics of Capital Gain Tax on the sale of the property.
Q: What are the rates for death duties?
A: The Moroccan Government does not levy taxes upon death. The simple procedure to register the
property in the name of the beneficiaries of a deceased holder of Moroccan property will be for the
beneficiaries to submit the certified copies of the official documents appointing them as beneficiaries to
a local Notary and he will draft the appropriate document with the name of the new beneficiaries for its
registration at the local Land Registry.
Q: What is the Capital Gains Tax rate?
A : The capital gains tax (Taxe sur le Profit Immobilier) is calculated on the NET profit realized upon
completion (hence all expenses relating to the acquisition, maintenance, refit and resale of the property in
question are deductible, including marketing costs but should never exceed 15% of the original
acquisition price).
The tax due will then be either calculated as 20% of the net profit or as 3% of the declared resale price, whichever is higher.
The tax due will then be either calculated as 20% of the net profit or as 3% of the declared resale price, whichever is higher.
Q: Can I take all my money out of Morocco when I sell?
A: Yes. That is why it is imperative to record through the lawyers or the developer the import of currency
with the local bank receiving the funds to allow repatriation of your investment plus profits when you sell.
Q: What are the taxes at the time of completing the transaction?
A:You will be responsible for the following taxes:- Land Registry fees 2, 50%
- Other Registrar (Conservation Foncière) 1%+ 150,00 MAD
- Notary’s tax 0,50%
- Notary’s fees (+VAT at 10%) 1%-minimum 2.500,00 MAD
- Sundries Minimum 1.500 MAD / Maximum 3.000 MAD
OTHER
Q: In the unlikely event Legalex Marbella (my lawyer) makes one or more mistake(s) or is negligent, what is Legalex ́s liability to me? Does Legalex Marbella have a Professional Indemnity Insurance that I would be able to make a successful claim against for example?
A: Under the rules of our Bar we must be insured against any claim arising from our advice to our clients
in the jurisdictions in which we operate. We would not be able to provide you our services unless we have
that insurance, very much like any solicitor should have in the UK.
Q: Do I need a lawyer to conclude this purchase?
A: Although there are no obligations to contract a lawyer to represent your interests, a competent lawyer
will not only bring you peace of mind that the acquisition process is followed diligently but also serve
as a guarantee that should anything happen during or after the transaction, you have someone to rely
upon.
Q: What are the fees for contracting Legalex Marbella?
A: A fee of 1% of the price appearing on the private purchase agreement will be charged. This fee is
payable 50% upon receiving the report on searches and the balance upon completion.
Q: What are the costs involved with the purchase?
A: The total acquisition costs for buying a property in Saïdia amount to approximately 6,5% to 7% of the
acquisition price, inclusive of lawyer’s fees, notary, registrar and stamp duty.
Q: Is the purchase price quoted inclusive of V.A.T ?
A: Yes, the price quoted by the developer and the agent is inclusive of V.A.T.copyright© legalexgroup.com 2007