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How To Buy A Property In MoroccoThe attraction
Itā€™s financial strategyMorocco offers additional benefits from a financial standpoint which makes it a highly attractive prospect for purchasers:
Itā€™s currencyA Euro equals 11.1 Dirham, a USD equals 8.2 Dirham. The unit of currency is the Dirham (Dh), which is divided into 100 centimes. Business visitors are advised to consult their banks for the current rate of exchange. No import of Dirham is allowed.The Moroccan Central Bank (Bank Al Maghreb) fixes the value of the Dirham using a basket of currencies including the Euro, Dollar and Yen. The Dirham is not yet fully convertible. Morocco tax infoThe Morocco tax system is modeled after the French system and has quite a few complexities. We always consult and work closely with our international tax advisers prior to offering our investors tax reduction strategies. The following information is a very basic guide to the Morocco tax implications for US and European investors:Buy and hold/let strategyPERSONAL INCOME TAX ON RENTAL INCOME (IGR) UK investors utilizing a buy let strategy will be responsible to pay tax on this income. In Tangier 60% of this income is taxable at 22% (other parts of Morocco are taxed at 44%). The city of Tangier has a 50% reduction on rental income tax adding yet one more advantage to invest in Tangier.There is also three year exoneration for the first three years the property is owned. PROPERTY TAX (Taxe Urbaine) (Personal vacation home option)Property taxes are paid annually. The first five years owners have full exoneration (Property agencies are NOT included). After 5 years the tax is based on the property's annual rental value. This is done with a graduated tax table:
There is a 75% discount if the home is your permanent or vacation home residence. PROPERTY RENTAL TAX (Taxe Urbaine) (Investor option) Investors pay 13.50% on the rental value of the property. GARBAGE COLLECTION TAX (Fiscalite des collectivites locales) there is 5 year exoneration from the garbage collection tax. Tax is levied at 10% of the property's annual rental value. Buy and sell strategyCAPITAL GAINS TAX (Taxe sur les Profits Immobiliers - TPI) Capital gains tax is 20% of profit with a minimum of 3% of the sale price. TPI is based on the sale price less the purchase price.Purchase price includes the following:
Exoneration from capital gains
Inheritance taxThis tax is 0% for family members. Expert advice should always be obtained prior to implementing any inheritance tax planning strategies. The most important piece of advice we can offer on this subject is - make a Moroccan will!Corporate taxIf you intend to purchase a number of Moroccan properties it may well be worth considering establishing a Moroccan Private Limited Company -The private limited company (SARL) (Setup time is about 3 weeks).The SARL is an intermediate type between associations of persons and of capital, bearing resemblance to both partnerships and share companies. It is always a trading company, regardless of its corporate name and its minimum equity capital is 100,000 DH. It may be formed by two or more members who are only liable to the amount of their share of the equity capital in the company. Unlike a general partnership, members of a private limited company do not need to be registered merchants. The private limited company must file a memorandum of association as part of its incorporation process. The capital stock has to be fully described and paid up as the company is formed. Stocks shall have the same face value and are not negotiable; they may be transferred only through contracts. "Parts Sociales" may be transferred to third parties outside the company only with the co-associates' consent.
Again remember that the Moroccan tax system is quite complex so always get expert tax advice before making an investment. If you require further information relating to Morocco taxation, please contact us. 10 reasons to buy your vacation home in Morocco
"MORTGAGES/FINANCING"Financing your Moroccan property investment is an important decision and could take the form of your own cash resources or, as most investors prefer, a mortgage or equity release scheme. Morocco offers mortgages for non-residents and all banking products are becoming widely available.1. MortgagesWe will gladly point you in the right direction of Moroccan financial institutions that will finance your investment. We have access to mortgages from many Moroccan and offshore banks, while the final choice depends solely on your circumstances.Although mortgages are available in Morocco, the most an overseas buyer can currently borrow is normally 60% of the valuation price. The purchase can be paid in either Euros, US Dollars or Sterling, and needs to be transferred from a foreign account into a Moroccan bank where the transaction will be processed into Dirhams. Mortgages are generally more expensive than British equivalents. It is a good idea to shop around the British banks as some will also lend for Moroccan property. Typical characteristics of a Moroccan mortgage:
Note: 6 months mortgage installments may be required to be held in the bank account. Moroccan banks will normally lend you up to 35% to 40% of your net salary without prior credit checks or confirmation of existing financial obligations. To help the mortgage application system move more swiftly it is advisable to have the following documents to hand. Employees will need:
Business owners will need:
The Association of Commerce Banks is a body which represents all recognized financial institutions in Morocco, and as such acts as a bond of reputability. Many of these banks will offer mortgage facilities to foreigners. Moroccan ACB member banks:
Off-Plan FinancingInvestors must remember that sometimes the developer will offer various finance options. This will often entail altering the required initial deposit and other key payment points throughout the construction phases of the property. Usually the developer can offer the most competitive finance options to investors and these are certainly worth considering.As always, before making a commitment, we recommend you discuss your investment strategy with a lawyer, a reputable property agent with experience in the area and even a financial advisor. 2. Equity ReleasePut simply, equity release is a way of releasing some cash from the home without having to sell up and move house.If you are in your mid-50s or older and own your own home, you may be able to get a cash lump sum, a regular income, or both, by using an equity release scheme based on the value of your property. These schemes can be helpful in certain circumstances to raise money for a mortgage to finance your Moroccan property investment 3. Alternative FinanceNot everybody falls into a category and some investors will need to raise finance in an alternative fashion to equity release or mortgage options. There are other borrowing facilities available to investors of Moroccan property.Contact our team for more information |
