Practical Informations

A STRONGLY DEVELOPING MARKET

For several years now, the Moroccan real estate market has demonstrated great dynamism. Housing demand is strong throughout the country. The government has made housing a major axis of its policy of sustainable development, through providing many fiscal incentives and important social housing aids.

Local demand is added to that of non-residents: Moroccans Residing Abroad who would like to purchase a plot of land in their country, or foreigners fascinated by the quality of living in Morocco.

The new programs also represent an important part of the real estate market and the number of constructions is in a permanent growth.

AN ADVANTAGEOUS TAX STRUCTURE

Fiscally, Morocco has set a number of advantageous tax incentive measures:

• A total exemption from taxes on increment value profit in case of cession of real estate property used for principal residence since eight years minimum;

• Exemption from rentals of General Tax on Income (GTI) for three years after the completion for construction work, following immediately an allowance of 40%

• Exception from urban tax for five years for all new constructions;

• Absence of inheritance tax.

OTHER ADVANTAGES FOR NON-RESIDENTS

Guaranteeing transfer, outside Morocco, of the proceeds of sale, with no limit in time and amount;

Guaranteeing transfer, outside Morocco, of the net increment value of real estate cession;

Fiscal agreement made with a number of countries aiming to avoid the double taxation of non-residents;

For beneficiaries of foreign retirement pension (the case of French retirees), a reduction of 80% of the amount of taxes, due to the retirement pension is expected, provided that a art of such pension is permanently transferred on a non-convertible dirhams account to Morocco. Taxation can vary from 5 to 15%.

SPECIAL ADVANTAGES FOR MRA

The legislation has prepared a specific fiscal framework for Moroccans Residing Abroad (MRA), for whom housing is fiscally comparable to the principal residence if it is inhabited by parents or rightful owners. It benefits then from tax incentives reserved for houses to be used as principle residence, namely urban tax exemption during the first five years.

Moreover, if a MRA whose real estate property is meant to be inhabited by parents, decides to sell in eight years, he should abide by the system applied on principal house transfer.

FLEXIBLE LAWS FOR FOREIGNERS

IN morocco, the ?office des changes? is an economic institution, depending on the Ministry of Finance, which regulates and controls all receipts and payments of foreign currency. For several years now, it has set regulations to foster foreign investments, namely real estate investments.

Foreigners residing and non-residing in Morocco benefit from a convertible system as to:

Foreign currency amounts going into Morocco in order to finance a real estate investment (including personal contribution an monthly instalments);

Leaser of real estate properties financed by amounts coming from abroad;

The proceeds of the resold property.

To benefit from these advantages, it is important to transfer foreign funds to a convertible dirhams account and to inform the ?office des changes? by means of notary public of the real estate purchase.

ACCOMPLISH YOUR REAL ESTATE PURCHASE IN MOROCCO

The purchase of real estate properties is proposed by our group within the framework of law no.44-00 on October 3^rd, 2002 relation to sale before completion. Such ?sale off pla? is a contract that binds the developer and the purchaser. The developer shall construct a building within a determined time limit while the purchaser shall pay the developer as progress of construction work is made.

One your real estate purchase is accomplished in Morocco; you must go through the notary public, to whom all funds shall be delivered. The purchaser can pay as construction advances of the purchased building, according to payment schedule set by the developer beforehand.

FINANCE YOUR PREPERTY

Case of Moroccan residents

You have available funds:

You only need to contact the notary public in charge of the purchase operation to carry out necessary formal procedures.

You finance a part of the purchase with the help of a real estate loan : the financing amount as well as financing conditions is determined depending on your reimbursement capacity and by securities you have in order to guarantee the loan to be contracted with your bank.

Recommendation:

In Morocco, if your bank has elements guaranteeing your loan, the bank financing can cover the total amount of purchase.

Case of non-resident Moroccans and Foreigners

• You have the available funds

You have them transferred either by a SWIFT bank transfer to your Moroccan account ( in convertible Dirhams) and you pay by check at the time of drawing up the authentic deed, or by SWIFT bank transfer from your foreign account of the notary public in charge of the operation.

• You finance your purchase with a loan in Morocco:

The bank asks you to make a down payment of at least 30% of the purchase price as well as all the associated taxes and fees (certified taxes, registration fees, etc). You should open your bank account in convertible dirhams. Monthly reimbursement payment would be done through this account.

• You finance your purchase with a mortgage in your country of residence:

Intermediary Moroccan banks will issue guarantees to the foreign bank that grants you medium-term or long-term loans for the purchase of your real estate property in Morocco.

In order to benefit from thins facility, you must present to the Intermediary Moroccan bank, prior to the issuance of the guarantee, a declaration on honor that you do not own any property in Morocco. The intermediary Moroccan bank issuing the guarantee will require a mortgage on the real estate property to be acquired; equivalent to at least the amount guaranteed and will make sure that the amount guaranteed and will make sure that the amount of acquisition including the other charges related to it (notary fees registration fees, etc) has been repatriated.

Recommendation:

It is highly recommended that you transfer your money via an account in convertible dirhams.

CONTRACT IN SBC

Sale before completion (SBC) includes a preliminary contract and a final bill for sale. A reservation contract can be initially planned in order to guarantee the real purchase to the client.

Reservation contract

This type of contract is subject to the general principles regulating the elaboration of contract in Morocco. It?s the conventional contract by which the developer reserves the possible purchase of a real estate property to the potential buyer.

The reservation contract, in general, includes a detailed description of the real estate property, inhabited surface area, number of rooms and outbuildings, price of sale, modes of payment, and the amount of guarantee deposit.

The following documents are handed over to the reserver at the time of signing the reservation contract:

A summary descriptive notice;

The master plan of the expected real estate complex;

Preliminary contract

This contract is binding and con not be concluded unless the ground-floor foundations are completed.

It shall include compulsory indications and specify the real estate property being subject to the contract, the term of delivery, the price and modes of payment, the reimbursement security, etc.

A terms of reference- including useful indications relation to consistency and technical characteristics of real estate property, the nature and the quality of materials and equipments as well as the construction time limit and term of delivery of the property-is signed by the parties and a certified true copy is issued to the purchaser.

A copy of the preliminary contract is given to the purchaser before the expected date of signature. The purchaser shall pay the price along with the progress of construction work and the developer remains the project owner until work completed. The developer continues to run construction operations and manages relationships with architects and contractors.

Final bill for sale

The transfer of the real estate property sold after concluding the final bill for sale, occurs in the presence of the notary and the inscription on the land books (not with the signature of the preliminary contract as in other countries).

Signing the final contract occurs once the total amount of the property is paid, construction work completed and residence license related to the property designated in the preliminary contract is obtained.

The purchaser has a number of guarantees in SBC:

Reimbursement securities

The developer must set up for the purchaser, at the time of signing the preliminary contract, the reimbursement guarantee stipulated by the law, that is an insurance or a down payment (bank or similar), in order to guarantee the restitution of the sums already paid, in case the developer can not finish the construction work planned.

Provisional registration

The preserve the purchaser?s rights, the law has set up the provisional registration, In order to temporarily preserve his rights, the purchaser can call for a provisional registration is to temporarily preserve an existing right, whose realization is delayed by a formal procedure to be accomplished.

Provisional registration remains valid until registering the final contract of sale on the estate?s land titled-deed, subject to the sale.

Concealed defect guarantee

The developer has a commitment towards the purchaser to guarantee any concealed defects, up to one year after delivery, contrary to apparent defects which the purchaser knew of beforehand or may have been easily aware of.

Decennial guarantee

For a period of ten years following ?completion of the works?; the decennial guarantee covers all damages including the sturdiness of the project, which, even if it is affected in one of its constituting elements, makes the project unsuitable for its purpose of use. (Roof faultiness, water infiltration, wall and foundation stability faults?).

To become a property owner in Morocco, it implies some fiscal consequences which should be known beforehand.

Below are u main obligations:

PURCHASE FEES

For constructed properties or plots meant for such purpose, purchase fees vary between 5 to 6% of the purchase price.

AFTER PURCHASE

In Morocco, when purchasing a real estate property, several types of taxes are to be paid to the state:

Urban tax:

It is calculated based on the rental value of the purchased estate and varies between 10 to 30%. It is determined by comparison or evaluation carried out by a census commission. The rental value is subject to annual revision.

The urban tax is not applied to new premises during the first five years, after the date of the delivered residence authorization. However, you benefit from a reduction of 75% of this tax if it is your primary residence.

Furthermore, the MRA benefit from the same reduction if the real estate property is inhabited by their parents or their rightful owners.

Income for real property

In case the real estate property is rented, you should declare rental income. Yet, rentals are exempted from GTI for the first three years, after completion of construction. After those three years, you benefit from a reduction of 40% on rental income that is imposed by GTI.

Municipal tax:

It is raised to 10% of yearly rental value taken to calculate the urban tax.

Tax on Profit Estate (TPE):

The TPE could possibly concern you, if you decide to resell your real estate property. It is about the difference between the price of sale and purchase. The rate is fixed at 20% and should not be inferior to 3% of the sale price.

The owner could be exempted from this tax if the sold estate has been his principle residence for more than eight years. If a MRA whose property is meant to accommodate his parents or rightful owners, decides to sell after eight years, he should abide by the system applied on principal residence cession.

Generally, there is a fiscal agreement of non-double taxation between most of European counties and Morocco. The fiscal residence notion will determine whether the Moroccan fiscal legislation is applied as to taxation. People usually residing in Morocco will be considered as fiscal residents.

WHY INVEST IN MOROCCO

• Very competitive property prices: 50% less than other European resorts

• Low cost of living: experience a luxury lifestyle at little expense

• High capitalization growth property market has captured the attention savvy investors who want to enhance the value of their money.

• Absence of inheritance tax.

• No annual property tax for the first five years following the purchase of the real estate property.

• Possibility of financing through a bank loan up to 70% of the property value for foreigners.

• Moroccan open skies to international airline companies. (Easy jet, Thomson fly, Ryan Air First are the first to have direct flight to Morocco)