Real estate co-ownership: a major change in taxation in Morocco

The Directorate General of Taxes has officially put an end to a contested administrative practice. Through a service note sent to its regional directorates, the tax administration now requires its registration offices to limit the tax base to only the individualized share of the outgoing co-owner, and no longer to the overall value of the real estate property.

Until now, the tax authorities systematically applied the rate of 1.5% on the entire asset held in co-ownership, even when a single member requested to delimit his or her share. This strict interpretation had led many taxpayers to take legal action, denouncing taxation on rights they did not effectively enjoy.

The key points of the tax reform:

• Change in tax base: Only the individualized share is now subject to registration fees.

• Rate maintained: The rate of 1.5% remains in force, but applies to a reduced amount.

• Legal security: This measure unifies practices and reduces disputes between users and the administration.

• Economic impact: An expected clarification to streamline the real estate market and encourage investment.

The Court of Cassation has recently ruled in favor of taxpayers on this dispute, considering that the maintenance of the state of co-ownership between the other owners does not justify taxation on all assets.

This harmonization between judicial jurisprudence and administrative practice is seen by professionals as a positive signal for the business climate.