Morocco’s Tax Trap: MREs Face Strict Rules on Real Estate Profit Exemptions

The 2025 MRE Tax Guide specifies that this exemption can only be granted once every five years, regardless of the value of the property transferred. And this condition is too often ignored, with significant tax consequences.

Conditions to Benefit from the Exemption

The exemption applies only if the transferred property meets all the following conditions:
• It is a building or part of a building used as the owner’s primary residence,
• The property has been occupied for at least five years prior to the date of the transfer,
• It has not been rented or used for professional purposes during this period.

The housing can also be occupied free of charge by the spouse, children or direct relatives of the MRE.

An Exemption... But Only Once Every 5 Years

Even if you own multiple primary residences, or if you temporarily return to Morocco after having transferred a first house, you can only benefit from this exemption once every five years.

"The person concerned cannot in any case benefit from this exemption more than once during the aforementioned five-year period," the guide states.

In other words, once the exemption has been obtained for a first resale, you will have to wait five full years before being able to claim it again, even if you have changed your primary residence.

A One-Year Deadline in Case of Vacancy of the Housing

The tax authorities provide limited flexibility in case of vacancy of the housing before the sale. If you leave your primary residence, you have up to one year to proceed with the sale, without losing the benefit of the exemption, provided that:
• The housing is not rented or used for other purposes during this period,
• It is indeed the same residence concerned by the previous main occupation.

The Case of Housing Acquired by Ijara Mountahia Bitamlik

The exemption is also granted if the primary residence has been acquired by an Islamic financing contract of the Ijara Mountahia Bitamlik type, provided that the housing has been effectively occupied. The rental period is then taken into account in the calculation of the five years.

Attention to the Land: The Exemption Has Its Limits

If the property sold includes land, the exemption applies only to the area equivalent to five times the built-up area. Beyond that, the surplus of land may be subject to tax on real estate profits.

What You Should Remember

• You benefit from a complete tax exemption when reselling your primary residence if you have occupied it for at least 5 years,
• But this advantage is only valid once every 5 years,
• And you have a maximum of 1 year after having left the housing to sell it while retaining this right.
• Any resale outside of this framework is subject to income tax on real estate profits, with a minimum of 3% of the sale price, even in the absence of a gain.