In brief: Article 28 of the General Tax Code (GTC) allows Moroccan taxpayers to deduct three categories of expenses from their overall taxable income (OTI): primary residence loan interest (up to 10% of OTI), retirement insurance contributions (10% of OTI, or 50% of net taxable salary for employees), and donations made to the organizations listed by law (public habous, National Mutual Aid, associations recognized as being of public interest, etc.). These deductions represent a major tax optimization lever for employees and professionals.
Primary Residence Loan Interest (Art. 28-II GTC)
Article 28-II of the General Tax Code grants taxpayers who take out a mortgage for the acquisition or construction of their primary residence the right to deduct the interest paid from their overall taxable income. This provision aims to encourage home ownership.
Eligibility Conditions
To benefit from this deduction, the taxpayer must meet the following conditions:
- The loan must be taken out with an approved credit institution or similar organization
- The financed property must constitute the taxpayer’s primary residence
- For employees, principal and interest repayments must be withheld and paid monthly by the employer to the lending institutions; other taxpayers must attach to their annual return a certified copy of the loan agreement (or Mourabaha / Ijara Mountahia Bittamlik contract) and the payment receipts or debit notices
Deduction Method
Interest paid during the year (or the pre-agreed remuneration under a Mourabaha contract, or the rental margin under an Ijara Mountahia Bittamlik contract) is deducted from the overall taxable income, up to a limit of 10% of that income (Art. 28-II GTC). For employees, the deduction is made at source by the employer; for other taxpayers, it is claimed in the annual return, upon proof of the interest actually paid.
Construction
When the loan finances the construction of the primary residence, the interest deduction is granted for a maximum of seven (7) years from the date the building permit is issued. If, after this period, the construction is not completed or the dwelling is not used as the primary residence, the taxpayer’s tax position is regularized. The taxpayer retains the right to the deduction for the remaining period until the end of the loan, provided that occupancy of the dwelling as the primary residence is proven.
Supplementary Retirement Insurance Contributions (Art. 28-III GTC)
Article 28-III of the GTC authorizes the deduction of premiums or contributions relating to individual or collective retirement insurance contracts with a duration of at least 8 years.
Deduction Ceiling
The deduction is limited to:
- 10% of the overall taxable income for taxpayers without salary income;
- 50% of the net taxable salary for taxpayers with salary income only;
- at the taxpayer’s choice, 50% of the net taxable salary or 10% of OTI for taxpayers with both salary income and other income.
The 10% deduction cannot be combined with the one provided for in Article 59-II-A for the retirement schemes of Moroccan pension bodies.
Practical Conditions
- The contract must be taken out with an insurance company established in Morocco
- The minimum contract duration is 8 years and benefits must be paid from the age of 45
- The taxpayer must provide a certified copy of the contract and the certificate of payment of contributions stating that they have opted for their deductibility
- At the end of the contract, the benefit may be paid as an annuity or as a lump sum. The lump sum is taxed by withholding tax at the progressive scale, after an allowance of 70% up to 168,000 MAD and 40% above, spread over a maximum period of four years. A surrender before 8 years or before age 45 is subject to a 15% withholding tax without allowance, which is not in full discharge of tax
For employees, if contributions are deducted directly from the salary by the employer, the employer integrates the deduction into the salary IR calculation. Otherwise, the employee makes the deduction in their annual return.
Deductible Donations and Contributions (Art. 28-I GTC)
Article 28-I provides for the deduction of cash or in-kind donations made to the organizations listed in Article 10-I-B-2° of the GTC, including:
- Public habous (mortmain properties managed by the Ministry of Habous)
- The National Mutual Aid organization
- Associations recognized as being of public interest that operate for charitable, scientific, cultural, literary, educational, sporting, teaching or health purposes
- Public institutions whose mission is to provide healthcare or carry out activities in the cultural, educational or research fields
- The Agency for the Promotion and Development of the North, the Agency for the Promotion and Development of the Southern Provinces, the Oriental Agency and the Hassan II Foundation for the fight against cancer
These donations must be supported by receipts issued by the beneficiary organizations. In-kind donations are valued at their market value on the date of the donation.
Summary Table of IR Deductions (Art. 28 GTC)
| Deduction | Legal Basis | Ceiling | Required Documentation |
|---|---|---|---|
| Primary residence loan interest | Art. 28-II | 10% of OTI | Employees: repayments withheld and paid monthly by the employer; other taxpayers: certified copy of the loan agreement and receipts or debit notices |
| Supplementary retirement contributions | Art. 28-III | 10% of OTI or 50% of net taxable salary | Certified copy of the contract, payment certificate stating the option for deductibility |
| Donations to the organizations of Art. 10-I-B-2° (public habous, public interest associations…) | Art. 28-I | Amount of donations (specific limits for certain organizations listed in Art. 10-I-B-2°) | Receipts from beneficiary organizations |
Practical Case: Employee with Mortgage and Retirement Insurance
Let us consider the case of Mr. Karim, an employee earning an annual net taxable salary of 180,000 MAD, who has taken out a primary residence loan and subscribed to a supplementary retirement insurance.
Data
| Element | Annual Amount (MAD) |
|---|---|
| Net taxable salary | 180,000 |
| Mortgage interest paid | 24,000 |
| Supplementary retirement contributions | 15,000 |
Deduction Calculation
Overall taxable income before deductions = 180,000 MAD
Loan interest deduction: ceiling of 10% of OTI = 180,000 × 10% = 18,000 MAD. The interest paid amounts to 24,000 MAD, so the deduction is capped at 18,000 MAD.
Supplementary retirement deduction: as Mr. Karim has salary income only, the ceiling is 50% of net taxable salary (90,000 MAD). The contributions paid of 15,000 MAD are fully deductible: 15,000 MAD.
Overall taxable income after deductions = 180,000 − 18,000 − 15,000 = 147,000 MAD
Impact on IR
| Scenario | OTI (MAD) | Gross IR (MAD) | Tax Savings |
|---|---|---|---|
| Without deductions | 180,000 | 39,200 | — |
| With Art. 28 deductions | 147,000 | 27,980 | 11,220 MAD |
Mr. Karim saves 11,220 MAD in IR thanks to the deductions on overall income, representing a reduction of nearly 29% of his tax.
Frequently Asked Questions (FAQ)
Can I deduct interest on a loan for a second home?
No. The loan interest deduction provided for in Article 28-II of the GTC is reserved exclusively for the taxpayer’s primary residence. Interest paid on a rental investment or second home is not deductible from overall income.
If my spouse and I have a joint loan, who can deduct the interest?
Each spouse can deduct the share of interest they actually bear, provided that the property constitutes the couple’s primary residence. In practice, if the loan is taken out jointly, each spouse deducts 50% of the interest, up to the limit of 10% of their own OTI.
Are CIMR contributions deductible under Article 28-III?
Yes. Employee contributions paid to the CIMR (Moroccan Interprofessional Retirement Fund) under a group supplementary retirement insurance contract are deductible under the conditions of Article 28-III-A, i.e. up to 50% of the net taxable salary for an employee with salary income only. This deduction is made directly by the employer through payroll (Art. 59-II), provided that the employer withholds and pays the contributions to the CIMR. Since the 2026 Finance Law, pensions paid under these group contracts are exempt from IR (Art. 57-27°).
Are donations made to a mosque deductible?
Only donations made to the organizations listed in Article 10-I-B-2° of the GTC (in particular public habous and associations recognized as being of public interest) are deductible. A donation made directly to a local mosque that is not managed by the public habous and does not have public interest status is not deductible.
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This article is written by the team of chartered accountants at Upsilon Consulting, a firm registered with the Order of Chartered Accountants (OEC) of Morocco.
