Market Value: Theoretical concept for tax income

Market Value: Theoretical concept for tax income


Lately, a member of my family, let’s call him Mr. M, wanted to buy a house. He went through the traditional Semsar to find “the best deal”, or as we call it in darija, “L‘Hemza”. He negotiated the price and could seal the deal with the house owners before going through the notary for the registration and the administrative steps. Luckily, he found the “Hemza” with a cheap price in a renowned neighborhood in Rabat. Every Dirham given to the seller was declared in the sale contract.

After a while, the new house owner received a letter from the Moroccan Tax Office, stating that the house’s market value does not correspond to the price of the purchase, and that he had to pay some additional taxes in order to stick to the evaluation. Both the seller and buyer received the notice with the same amount of tax they have to pay.

Why are the evaluation and additional taxes given after the purchase time? Why aren’t they part of the administrative steps that come with the purchase procedure?

The market value stays a theoretical concept that was introduced as a business tool, which can be calculated in real estate using some statistics, by taking into account the different sales in the region. In other words, the market value is not an “exact science”, but a probabilistic evaluation depending on the sales and the location.

There is a “zone-division” project being prepared for the coming months, as confirmed by a tax officer. Would it reduce real estate transactions, like the recent second residence taxes? How is it going to tackle the non-homogeneity of the real estate world with a standardized approach? In other words, is it dangerous to have a homogeneous “zone” price or range of prices in a zone where each apartment may have its own specifications: one has a view on the street and a direct access to a garage, and a building elevator, while others have none of the above?

 To sum up, and putting all the questions aside, the house owner has a very high probability of paying the tax income, even after writing an objection letter to the tax office. That is the conclusion he came down to after talking with a number of people who tried rejecting these tax after their purchase, and especially after the sellers had paid their part. Luckily, he can negotiate the tax with the tax officers in order to be reduced.  Therefore, when pursuing the goal of purchasing a real estate product in Morocco, one should take into account a number of parameters and expenses including a potential tax, and should be able to negotiate as much the product price as the tax coming with it. Long life to negotiation!

Omar Benkirane.