Capital Gains Tax on Real Estate in Morocco

What is Capital Gains Tax on Real Estate in Morocco?

When you sell a property in Morocco for more than you paid, the government taxes your profit. This is known as Capital Gains Tax, or “Impôt sur la Plus-Value Immobilière (IPV)”.

Because this tax applies to most real estate transactions, it is essential to understand how it works. This knowledge is especially important for homeowners, investors, and real estate professionals.

Capital Gains Tax Rate in Morocco

In Morocco, the Capital Gains Tax is applied in two ways:

20% of your net capital gain
Or a minimum of 3% of the total selling price — whichever is higher

This system ensures that a base tax amount is always collected, even when deductions reduce the profit significantly.

How to Calculate Capital Gains on Real Estate

To determine your capital gain, subtract the adjusted purchase price from the selling price.

The adjusted purchase price includes:

The original purchase cost
Acquisition expenses, such as notary and registration fees
Renovation or construction costs
Selling-related costs, like agent commissions

✅ Example:

Suppose you bought a property for 1,000,000 MAD, spent 100,000 MAD on improvements, and later sold it for 1,500,000 MAD.
In this case, your taxable capital gain would be:

👉 1,500,000 − (1,000,000 + 100,000) = 400,000 MAD

As you can see, calculating your gain is straightforward once you know what to include.

Exemptions and Deductions on Capital Gains

Fortunately, you may qualify for certain exemptions that can lower or even eliminate your tax. Let’s explore the main ones:

🏡 1. Exemption for Primary Residence

If the property was your main home and you lived in it for at least five consecutive years, the capital gain may be fully exempt from taxation.

📅 2. Deduction for Long-Term Ownership

The longer you own a property beyond five years, the more tax relief you receive. Specifically:

You get a 5% deduction for each year of ownership after year five
After 25 years, the gain becomes 100% exempt

This rule clearly encourages long-term ownership.

💰 3. Exemption for Properties Sold Under 1 Million MAD

If your property sells for less than 1 million MAD, you may benefit from a full exemption—as long as the sale meets conditions outlined in Article 241 bis II of Morocco’s tax code.