Rental Tax

chaitime

What taxes am I liable for in Morocco if I buy and rent a property there? Also, how does the rental income affect my UK tax position?

moroccomania

Cool name "chaitime"!!

When buying a property, you should allow for anywhere between 5-7% of your purchase price as taxes and other costs. I think I do have a breakdown somewhere, so if you want it, lemme know and i'll dig it up for you.

With regards to the rental, because morocco is amining for an increase in tourism, buy to let investors are exempt from rental income tax for the first three years of rental - which i think is great! After that, you'll pay anywhere between 22%-44% tax on 60% of your rental income.

I would recommend that you speak to a specialist tax advisor re your uk tax position. Everyone's tax situation is different and its best to seek advice before you commit to anything.

Hope this helps and good luck.

simonw

I think you may need to check that moroccomania; my understanding is that all income tax on property rentals is waived by the government for the first 5 years (not 3) that the property is let.

As far as rental income goes, UK residents are liable for UK tax on any worldwide profits or income so don’t forget to declare your property to the Inland Revenue – you will of course get a credit for any taxes paid abroad.

And yes, as everyone’s tax situation is different, you should speak to a tax a specialist to get a clearer picture of your personal situation.

moroccomania

simonw,

I think what you are referring to is the Personal vacation home property tax, which is a 5 year tax break. But otherwise, it's three years. See below.

PERSONAL 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 a 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:

Value Tax
Less than 3,000dh 0%
between 3,001 and 6,000 dh 10%
between 6,001 and 12,000 dh 16%
between 1,201 and 24,000 dh 20%
between 2,401 and 36,000 dh 24%
between 3,6001 and 60,000 dh 28%
more than 60,000 dh 30%

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.

chaitime

Thanks people, but now I'm a little confused?? Are you saying that I am exempt for 5 years if I buy for personal use and 3 years if I let the property out and receive rental income? Please clarify.