Wealthy real estate investors attracted to luxury property in Morocco
The second home industry in Morocco is expanding and attracting domestic buyers as well as wealthy property investors from around the globe, according to a new report.
Over the last decade, Morocco has benefited from strong macroeconomic policies that have contributed to its economic growth, improving social indicators and expanding middle class, says the report from Aylesford International.
It points out that according to Wealth-X there are now 35 ultra high net worth individuals in Morocco, with a total wealth of US$5 billion who are interested in property as an investment.
Political reform introduced with a new constitution in July 2011 has meant Morocco has not experienced the social unrest of the wider north African region and as such, tourism and the second home industry have continued to expand, attracting both fashionable domestic clientele as well as the international elite, and have been key to driving the country’s economy.
The report also says that there is now a substantial expat community in Morocco. Foreign residents are primarily from Francophone countries and the UK, as well as those from much further afield. They are attracted to Morocco’s moderate property transaction costs, liberal inheritance laws, and supply of exceptional, high end properties.
Recently, however, slow growth in the European Union, particularly in France and Spain which are Morocco’s key export partners, has had an impact on economic performance, and the current deficit is thought to have increased to 8.8% of GDP in 2012, according to figures from the International Monetary Fund.
To that end, Morocco’s Budget in 2013 has sought to tax both high income earners as well as companies that produce large profits. Effective as of 01 January 2013 for three years until the end of 2015, the ‘social contribution’ applies to individuals whose net, Moroccan sourced salaries are above 360,000 dirhams (£28,200), at progressive rates from 2% to 6%. The highest rate is applied to salaries in excess of 840,000 dirhams or £65,800.
The report details what taxes are payable on buying and selling property in Morocco. When buying there is an agent commission of 2.5%, at Notary fee of 1% plus VAT at 10% plus a Notarial tax of 0.5%. There is also a land registration fee of 3% to 4% plus land registry tax of 1%.
When selling a property there is no inheritance tax as such but gift tax may be levied at a flat rate of 20%. Capital Gains Tax applies to the sale of a property unless it has been the owner’s principal residence for six years. Gains are subject to the tax on real estate profits at a 20% rate.
The minimum tax is 3% of the transfer price. However, gains derived from the sale of property amounting to a maximum of MAD140,000 per year are exempt.
As far as local property taxes are concerned owners face and annul urban tax from local municipalities which are progressive from 0.025% to 0.5%. There is a tax d’habitation which is an annual property tax based on 0% to 30% of the rental value of the property. Only 25% of the assessed rental property value is subject to tax when it is a primary residence.
Properties that are attracting wealthy buyers in Morocco include a five bedroom villa in Marrakech with two guest houses, pool, tennis courts and a three hectare garden priced at €2.9 million.
There is also a four to six bedroom villa on a private estate which includes an 18 hole golf course, luxury boutique hotel, and spa which is due for completion in 2015 which start at €1.91 million.