Housing Tax Morocco: Rates, Calculation and Exemptions

Once you have the keys to your riad in hand, your tax obligations do not end with the sale. Every year, property owners in Morocco are liable for two local taxes: the council tax and the municipal services tax. The amounts involved are generally modest compared to the price of the property, but the way they are calculated often surprises our French clients, as it depends on how you use the property: as a main residence, a second home or a rental property.

This guide is based on Law No. 47-06 on local authority taxation, as amended by Law No. 07-20. It supplements our Guide to property taxation in Morocco, which sets out all the taxes relating to a property, from purchase to resale.

In short : The housing tax applies to the property you occupy yourself (or make available free of charge to your immediate family), with a scale ranging from 0 to 30 % of the rental value and an allowance of 75 % for your main residence. The municipal services tax is added at a rate of 10.50 % in urban areas such as the medina of Marrakech. If the property is let, the municipal services tax, based on the rent, takes precedence.

The council tax: who is affected?

Taxable assets

Under Article 19 of Law No. 47-06, the housing tax is levied annually on buildings occupied, in whole or in part, by their owners as’main or second home, or made available free of charge to their spouse, ascendants or descendants. It includes the land and the immediate outbuildings (courtyard, garden, passageways).

It is drawn up in the name of the owner or the usufructuary. In the case of joint ownership, it is drawn up in the name of the joint owners, unless the joint owners request that it be drawn up separately for each residential unit used independently.

Territorial scope

The tax applies within urban boundaries, in designated town centres, in summer, winter and spa resorts, as well as in areas covered by a development plan. A Marrakech riad in the medina, just like a villa in Guéliz or L’Hivernage, therefore falls within its scope.

The main exemptions

• New-build properties : New buildings constructed as a principal residence are exempt from tax for the five years following their completion.
• Permanent exemptions : they mainly apply to the property of the State, local authorities, certain organisations and institutions, public waqf property and non-income-generating buildings classified or listed as historic monuments, in accordance with the conditions laid down in the relevant legislation.

How is the council tax calculated?

The rental value, the basis for the tax

The tax is calculated on the basis of the rentable value the rent, determined by a valuation committee by comparison with the average rents charged for similar properties in the same neighbourhood. It is revised every five years by an increase of 2 %. It is therefore neither the purchase price nor the market value that serves as the basis, but a theoretical annual rent.

The 75 % allowance for the main residence

An allowance of 75 % applies to the rental value of the owner’s or usufructuary’s main residence. It also extends to a property occupied as a main residence by a spouse, first-degree ascendants or descendants, and to a property that Moroccans living abroad retain in Morocco where it is occupied free of charge by these relatives. It cannot be combined with any other reduction.

The key point for a foreign buyer: if your riad is a holiday home, he is indeed liable for council tax, but without the 75 % allowance, which is reserved for the main residence.

The scale

Article 27 sets out the rates by bands of annual rental value:

• from 0 to 5,000 DH: exempt; ;
• from 5,001 to 20,000 DH: 10 %; ;
• from 20,001 to 40,000 DH: 20 %; ;
• over 40,000 DH: 30 %.

The tax is assessed via the tax roll: you will receive a tax notice. No tax notice is issued if the amount due is less than 200 DH.

The local services charge

Who pays for it, and on what basis?

The municipal services tax (TSC) is payable annually by the owner or beneficial owner of any type of built property. The tax base depends on the location of the property (Article 35):

• For a property subject to council tax or business rates, the TSC is calculated on the basis of the the same rental value, including where the property is exempt from these taxes; ;
• for a property that is not subject to council tax, it is calculated on the basis of the total rent when it is let, or on its rental value when it is made available to third parties free of charge.

The rates

• 10,50 % for properties situated within urban areas, designated centres and summer, winter and spa resorts: this applies to the medina and the central districts of Marrakech; ;
• 6,50 % for properties situated in other areas covered by a development plan.

Main residence, second home or rental property: three real-life examples

You live in your riad all year round

This is your main residence: you pay council tax based on the rental value after a deduction of 75 %, and the TSC based on the rental value. This is the most favourable situation, and the one faced by many pensioners living in Marrakech. Our article on the retirement in Morocco sets out the other aspects of an installation.

You look after them for a few weeks a year

It is a second home: council tax is payable in full, with no allowance, and the TSC is calculated on the basis of the rental value. The amount depends on the rental value set by the valuation committee for your neighbourhood.

You’re renting it

In principle, a let property is not occupied by its owner and is therefore exempt from the housing tax. However, the TSC remains payable and, for a property not subject to the housing tax, it is calculated on the total amount of rent. Example: a riad situated in the medina, let to a tenant for 180,000 DH in gross rent over the year, would be subject to a TSC of 180,000 × 10.50 %, i.e. 18,900 DH. If the riad is operated as a guesthouse subject to business tax, the TSC is then based on the rental value used for that tax.

This local tax is in addition to the income tax payable on rental income: make sure you factor it into your return calculation from the outset. Our guide to the’1-bedroom, 1-bathroom rental property helps you draw up a comprehensive forecast.

Your reporting obligations

• Change of ownership : Following your purchase, a declaration of change of ownership or use must be submitted by 31 January of the following year. Tax will then be assessed in your name for the following year.
• Completion of works : if you are building or extending a property, the same deadline applies to the completion notification.
• Holiday : a property that is vacant at the time of the census – whether due to major repairs or because it is intended for sale or let – remains subject to tax; however, the owner may obtain an exemption by providing evidence of the vacancy in accordance with the conditions laid down by law (complete removal of furniture, presence of tradespeople, meters removed, etc.).

When carrying out major renovation work on a riad, do remember to keep records of the building work: these may be used to justify the property being unoccupied.

Tips from our homeowners

• Ask the seller for their most recent tax assessment notices and proof of payment before signing: you’ll know what to expect and avoid discovering any outstanding payments.
• Get your financial situation assessed in your first year : whether it is a main or second home, a rental property or a guest house, the rules are different.
• Please enter the TSC item number : This is required on the tax return for landlords. Keep it in a safe place.
• If you live outside Morocco, appoint a trusted person or a manager to receive notifications and avoid late payment surcharges.

Frequently Asked Questions

Do foreign nationals pay council tax in Morocco?

Yes, under the same conditions as a Moroccan resident: the tax depends on whether the property is occupied by its owner, not on their nationality. For a second home, the 75 % allowance does not apply.

What is the difference between council tax and the municipal services charge?

The council tax applies to properties occupied by the owner or their immediate family. The local services charge applies to all built properties, including those that are let, and funds the local authority’s services.

What is the rate of the local services tax at Marrakech?

For a property situated within the urban area, such as the medina, the rate is 10.50 % of the rental value, or of the rent for a let property not subject to the housing tax. It is 6.50 % in other areas covered by a development plan.

My riad is undergoing renovation: do I have to pay council tax?

The tax is levied even if the premises are vacant, but you may be exempted if the premises are vacant due to major repairs and you provide evidence of this in accordance with the conditions laid down by law.

Do you need to declare your purchase for the council tax?

Yes. The new owner must submit a declaration of change of ownership by 31 January of the year following the purchase.

Need to get a clear picture of your annual budget?

Local taxes, service charges, maintenance, management: we help you estimate the true cost of owning a riad before you commit, and we support you after the purchase. Contact Klair & Arno to talk about it.