Morocco Overhauls Rental Income Tax System, Impacting Landlords and Tenants

Owners receiving significant rental income could be affected by these measures in force since 2023. With the taxation of net rental income at 40%, their tax burden should increase considerably, reports Challenge. The same goes for owners with modest rental income who could spend more money to fulfill new administrative formalities in the process of preparing and submitting the declaration. Tenants are not spared by these new rules. They could see their rents increase as landlords seek to offset their rising tax burden.

Concretely, these new measures concern landlords receiving rental income, taxpayers holding real estate income for the year 2023, and taxpayers whose net taxable annual real estate income does not exceed 30,000 dirhams. Before 2023, rental income was subject to a fixed tax rate of 10% for income below 120,000 dirhams and 15% for income above this amount, recalls Abdelbasset Mohandis, chartered accountant and statutory auditor, adding that the calculation of the tax on rental income takes into account certain key elements.

"The taxable gross base is established by adding the total amount of rents received with the expenses borne by the owner and charged to the tenants, such as insurance premiums or major repairs. However, the charges borne by the owner on behalf of the tenants, such as syndicate fees or the municipal services tax, must be deducted from this base," explains the chartered accountant. These new measures require all owners to declare their real estate income annually.