Rental income taxation in Morocco 2026: income tax, municipal taxes, MRE treaties

Rental investment in Morocco is attractive as long as you compute NET yield, not gross. Morocco's rental tax regime evolved in 2024-2025 — here's what it actually takes.

Income tax on rental: the main item

Rents in Morocco fall under personal income tax, real estate income category. Two regimes in 2026:

• Annual rent < 120,000 MAD: opt for flat 10% withholding (simplest, best for small investors)
• Annual rent ≥ 120,000 MAD: progressive scale (0% to 38%) after 40% deductible for expenses

For 7,000 MAD/month (84,000/year): flat 10% = 8,400 MAD tax; progressive scale = 0 MAD (40% deduction + first bracket). For 150,000/year, flat 10% beats progressive.

Municipal taxes: who pays?

Two main municipal taxes that often remain unclear:

• Habitation tax: typically tenant in residential rentals (5-15% of administrative value)
• Communal services tax: always landlord (10.5% Casa/Rabat, 6.5% elsewhere)
• Non-built urban land tax: only for undeveloped urban land

MRE special case — non-double-taxation treaty

If you're an MRE resident in France, Belgium, Spain, etc., bilateral treaties stipulate Moroccan rental income is taxed ONLY in Morocco.

But you must still DECLARE these revenues in your country of residence, even if they're not taxed. Some treaties include an 'effective rate' clause.

VAT on rentals: who's concerned?

Residential rentals are VAT-exempt. Commercial rentals (offices, shops) are subject to 20% VAT if landlord exceeds 500,000 MAD/year.

Capital gains on resale — TPI

TPI at resale: 20% on net gain, minimum 3% of sale price. Gain = sale price minus indexed acquisition cost minus justified improvements.

Exemption: main residence held >6 years = 0 TPI. No exemption for investment property.

Concrete calculation: gross vs net yield

Maarif Casa 2026 — 85 m² at 1,340,000 MAD, rented 8,800 MAD/month:

• Gross annual rent: 105,600 MAD
• Gross yield: 7.9%
• Income tax (10% flat): -10,560 MAD
• Communal services tax: -8,870 MAD
• Co-ownership charges: -6,000 MAD
• Property management: -8,800 MAD
• 1-month vacancy: -8,800 MAD
• Net annual rent: 62,570 MAD
• Net yield: 4.7%

Real net yield is typically 2-3 points below the gross yield. This is the gap every investor must anticipate.

Legal optimization strategies

• Choose the right tax regime — recalculate yearly
• Justify major works — deductible under progressive scheme
• Plan holding period — occupy as main residence then sell after 6 years to neutralize TPI
• Use MRE treaty — rentals taxed only in Morocco
• Rent via SARL company — only if multiple properties