Selling in Morocco: why has the practice of “black” disappeared?
In Morocco, "black market" real estate transactions are still deeply ingrained in people's minds. In practice, informed consumers are becoming less and less inclined to give in to this temptation, which actually exposes them to risks often greater than the benefits gained.
Here's why:
1 . For the seller : Very low risk-to-reward ratio
Private sellers who still request payment of part of the sale price in the black market mainly wish to circumvent the 20% tax on real estate capital gains.
However, since the 2020 Finance Law in Morocco, anyone selling their primary residence, regardless of the duration of ownership and the date of purchase, is completely exempt from paying this tax, on the sole condition of purchasing a new property within 6 months of the sale. This condition is very lenient, with a little bit of planning...
As for sellers of secondary residences who wish to resort to the "black market" to avoid declaring capital gains, they should know that they will still be subject to a minimum tax threshold of 3% of the sale price. Very often, the savings made are therefore lower than the risks involved. For example:
You sell a secondary residence for MAD 1,200,000, which you bought for MAD 1,000,000 all-inclusive 5 years ago, making a profit of MAD 200,000.
- Scenario 1: You declare the capital gain of MAD 200,000 and pay a 20% tax on this amount, which is MAD 40,000.
- Scenario 2: You request payment of MAD 200,000 in the black market to declare the sale at MAD 1,000,000, you do not declare any capital gain, but you still remain liable for a minimum threshold to pay, which is 3%, or MAD 30,000. By resorting to the "black market," you think you have saved MAD 10,000.
In reality:
- Sales timelines are extended, and the sale is less smooth because you need to find a buyer with sufficient funds who accepts this practice, so you have wasted a lot of time.
- Negotiation margins are considerably higher when part of the property is paid for "in the black market." These MAD 10,000 you think you've saved are often absorbed in negotiations with buyers expecting a concession in return.
- You risk audits, legal actions, and jeopardizing your reputation and integrity.
2 . For the buyer : no benefit!
Buyers who agree to pay part of their acquisition in the black market must realize that their property will be undervalued by the same amount since it will be registered with the land registry at a lower price than the market value. Firstly, this will result in a lower valuation of their property upon resale. Secondly, this will lead to a larger (but fictitious) capital gain and, therefore, an increase in the tax to be paid upon resale (see above). Moreover, by agreeing to pay "in the black market," you are tying up personal savings or that of your close ones, which could have been used to negotiate a more favorable loan rate, for example, or to pursue a personal project.
The online estimation tools developed by agenz and accessible on our website www.agenz.ma already incorporate coefficients to correct for this practice. If you estimate a property on our site, the price will be as close as possible to the current market trends.
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