Buying Property in Morocco
In the Plan Azur, £2 billion of government investment will go towards the development of 6 new coastal resorts, upgrading existing infrastructure, construction of new roads, airports and transport links. Investment will also aid the construction of 80,000 new hotel beds which will generate 600,000 new jobs in the hotel and tourism industry. All of which has les to exponential growth in the Moroccan property market in recent times.
Highlighting the huge development prospects in Morocco, the UAE’s largest property developer Emaar has stated they are to strengthen their position in this new market place, investing over AED23.5 billion (£3.3billion) into Morocco and opening headquarters in Marrakech
The main economic points:
• Strong economy with 2.1 % GDP growth in 2007
• 25% capital gain in 2006
• Stable currency pegged to the €uro
• Low Inflation of 2.3% in 2007.
• Attracted just under $3billion (£1.65 billion) of Foreign Direct Investment in 2005
Profit from Property in Morocco
The Moroccan property market is growing at a fast, yet sustainable pace. With the low cost of living it is possible to experience a luxury lifestyle at relatively small expense and there are no restrictions on foreigner ownership of property. Capital growth over the past three years has been in the region of 15 – 30% per annum.
Property Investment Facts:
• Property prices are around 50% cheaper than European comparables.
• Full freehold ownership rights for foreigners.
• 70% LTV Mortgages available to foreigners at around 6%.
• No tax payable on rental income for the first five years.
• Only 20% capital gains tax, falling to 10% after 5 years and nothing after 10 years.
• Fast growing property market.
• 0% inheritance tax.
• Comparable off-plan properties bought 4 years ago in the UAE for £60,000 are now worth in excess of £140,000.
· Mediterranean climate – hot summers, mild winters
Can foreign nationals own property in Morocco?
Any investor, whether a resident or overseas buyer, can purchase property in Morocco.
The Moroccan Property Market
Why should I choose Morocco?
Morocco is a modern economy with many new projects underway to dramatically increase Morocco’s standards of infrastructure and tourism facilities. By 2010 Morocco is expected to welcome some 10 million tourists per annum and this will undoubtedly have a very positive effect on any property investments made today.
Meanwhile, much property construction is currently taking place, including six luxury resorts which are part of a very secure government project, “Vision 2010”. The projects are backed by King Mohammed VI, a fact which further increases all-round investor confidence.
Morocco is now part of the “Open Skies” Agreement and direct budget flights are increasingly available to any of Morocco’s international airports. Ryan Air’s announcement in 2007 for 20 new routes to regional airports in Morocco, bringing with them an expected 1 million passengers per year is an example of the exciting new future Morocco has to offer.
The buying procedure is simple and akin to the French system, as are many of the legal and financial institutions. 0% inheritance tax and in some cases capital gains tax as well as other tax exemptions continue to entice investors to Morocco.
Today capital appreciation on Moroccan property can be achieved at between 15% and 30% depending on the property you purchase. However, once Vision 2010 is completed and visitor numbers have increased, these figures are likely to soar upwards.
Finally, the cost of living, fantastic sunny climate, sporting facilities, rich culture vying with a cosmopolitan life, all make Morocco a highly attractive location in which to invest.
What is the economic and political situation?
Morocco has a constitutional monarchy, under King Mohammed VI, who is a leading force in the country’s parliament and its policy making. The King’s progressive spirit and the nature of his policies have transformed Morocco into a land of promise, while huge investment is going into infrastructure projects to encourage overseas interest in the tourist industry here. A moderate Arab state, Morocco maintains close relations with Europe and the United States. It is a member of the UN, contributing consistently to UN peacekeeping efforts on the continent.
Moroccan Taxation
Every tax system is different and the Moroccan system is no exception. With its tax laws left as a legacy from the French colonial days, it is essential to have a professional guide you through the process. Each case is unique and there is no rule of thumb to go by.
Tax on Rental Income
Investors from the UK looking to operate a buy-to-let strategy with their Morocco based property investment will be required to pay tax on this generated income. The first three years can be exempt of tax, but afterwards investors must pay tax on 60% of their generated income at levels between 22% and 44%. In Tangier, for example, a buy-to-let investor would, after 3 years, be subject to a tax of 22% on 60% of the rental income from his buy-to-let investment property in Morocco.
Property Tax
In Morocco, property owners are required to pay an annual property tax. The first five years are exempt. After this, tax is due based on the annual rental value of the property.
Travel to Morocco
A short flight from the UK and a quick ferry crossing from mainland Spain, Morocco is easily accessible.
Morocco’s national airline is Royal Air Maroc (AT) (website: www.royalairmaroc.com). Other airlines serving Morocco are Ryanair, EasyJet, Atlas Blue Air France, Alitalia, British Airways, Iberia KLM, Lufthansa and Swiss Airlines. Direct flights from all major European cities are fast and frequent.
Property Rental Tax
If investors do not live in the property at all, a tax of 13.50% on the rental value is levied.
Garbage Collection Tax
The owner of a property is exempt from the garbage collection tax for the first five years. After this period, tax is charged at 10% of the property's annual rental value.
Capital Gains Tax
If the property is sold within five years, capital gains tax is charged at 20% of profit with aminimum of 3% of the sale price. A property sold between six and ten years of ownership will pay 10% capital gains tax and 0% thereafter. Capital gains tax is based on the sale price less the purchase price.
Inheritance Tax
There is 0% inheritance tax for family members, but it is essential to make a legal Moroccan will and seek professional tax advice beforehand. You can ask specific questions or request a call from a tax specialist by completing the small form above.
UK-Morocco Tax Treaty
There is a double tax treaty in place between Morocco and the UK and this protects the investor from being liable for capital gains tax in both countries.
Corporate Tax
If you are considering investing in multiple property units in Morocco, it may be an idea to consider creating a Moroccan private limited company.