Rental income covered by article 61-I-A-1°, B, C and D of the CGI benefits from a 40% allowance for taxation under the progressive scale. Agricultural property rentals under article 61-I-A-2° follow article 64-III, without that allowance. Where the tenant is a legal entity or a professional under the actual net income or simplified net income regime, it applies a withholding tax of 10% (gross annual property income below 120,000 MAD) or 15% (120,000 MAD and above), calculated on the gross amount. This withholding is not final: it is creditable against the income tax due under the scale, with any excess subject to automatic refund (Art. 160 bis and 241 bis). The only final regime is the optional 20% levy (Art. 64-IV and 73-II-F-12°), reserved for rents subject to withholding tax. The payer is exempt from the 10% and 15% withholding where annual gross taxable rent paid to the same owner does not exceed 40,000 MAD. This does not exempt the income from income tax.
Definition of property income — Art. 61-I
Article 61-I of the CGI classifies as property income, where it is not professional income, rents from buildings and agricultural properties, certain rental values of property made available free of charge, eviction compensation paid to occupants and proceeds from profits distributed by OPCIs.
The rental value of property made available free of charge to a third party is taxable, except under article 62-I of the CGI: ascendants and descendants living there, State administrations and local authorities, public hospitals, State-supervised private assistance and charitable organizations, and recognized public-interest associations installing non-profit charitable institutions there.
Furnished rentals (property equipped with furniture and fittings) and subletting do not fall under property income: the tax administration treats them as professional income, with no 40% allowance.
Income from the rental of property rights, usufruct, usage rights or enjoyment of real property is also treated as property income.
It is important to distinguish property income from professional income: when rental is carried out as a regular professional activity (organised seasonal rental, managed tourist residences), the income may fall under the professional income category.
Tax base: the 40% flat-rate allowance — Art. 64
Gross property income consists of the total amount of rents, increased by expenses normally incumbent on the owner but charged to the tenant (major repairs in particular) and reduced by charges borne by the owner on behalf of the tenants (Art. 64-I). The net property income taxable under the scale is then obtained by applying a 40% flat-rate allowance: Rental income covered by article 61-I-A-1°, B, C and D of the CGI benefits from a 40% allowance for taxation under the progressive scale. Agricultural property rentals under article 61-I-A-2° follow article 64-III, without that allowance.
For income eligible for the 40% allowance (excluding agricultural property rentals under article 64-III):
Net property income = Gross property income × (1 − 40%) = Gross income × 60%
This allowance (Art. 64-II of the CGI) applies only for taxation under the progressive income tax scale. The 10% or 15% withholding tax and the optional 20% final levy are, by contrast, calculated on gross property income (see following sections). The 40% allowance covers the owner’s expenses on a flat-rate basis. Before applying it, gross income is reduced by expenses borne by the owner on behalf of tenants, including common service expenses and the municipal services tax when separately stated in the lease, under article 64-I of the CGI and Circular Note no. 717.
Gross property income comprises:
- The total amount of rents for the calendar year
- Rent supplements: key money, compensation, landlord charges passed on to the tenant
- The rental value of properties provided free of charge, assessed by comparison with similar properties
Standard regime: the progressive income tax scale — Art. 73-I
Net property income (after the 40% allowance) is added to the taxpayer’s other income categories (salaries, professional income, etc.) to form the taxable global income, subject to the progressive income tax scale in force since the 2025 Finance Act:
| Annual net global income bracket | Rate |
|---|---|
| Up to 40,000 MAD | 0% |
| From 40,001 to 60,000 MAD | 10% |
| From 60,001 to 80,000 MAD | 20% |
| From 80,001 to 100,000 MAD | 30% |
| From 100,001 to 180,000 MAD | 34% |
| Above 180,000 MAD | 37% |
The progressive scale applies to individuals’ property income, subject to the 20% final withholding option. Rentals classified as professional income follow their own regime. Where the tenant is a non-professional private individual, no withholding is applied: the tax is settled entirely through the annual global income return.
10% or 15% withholding tax applied by the tenant — Art. 160 bis
Where the rent is paid by a legal entity governed by public or private law, or by an individual whose professional income falls under the actual net income or simplified net income regime, that tenant must apply a withholding tax on the gross amount of the rent and pay it to the Treasury before the end of the month following that of the withholding (Art. 174-IV):
| Gross annual property income | Withholding rate | Reference |
|---|---|---|
| Below 120,000 MAD | 10% | Art. 73-II-B-5° |
| Equal to or above 120,000 MAD | 15% | Art. 73-II-C-4° |
Three points are essential:
- The withholding is not final. The last paragraph of Article 73 lists the levies that are final (in full discharge of income tax); the 10% (B-5°) and 15% (C-4°) rates have not appeared on that list since the 2023 Finance Act. The landlord therefore reports the rents in global income, computes income tax under the scale after the 40% allowance, and credits the withholding suffered against that tax. If the withholding exceeds the tax due, the excess is subject to automatic refund on the basis of the return (Art. 241 bis-I).
- Exemption up to and including 40,000 MAD. The tenant is exempt from the withholding obligation where the gross annual amount of rents paid to the same owner does not exceed 40,000 MAD (Art. 160 bis, last paragraph). This is an exemption from withholding, not from tax: the income remains taxable under the scale.
- The 120,000 MAD threshold separating the 10% and 15% rates is assessed on the gross annual amount of taxable property income.
These withholdings act as an advance payment collected by the tenant on behalf of the Treasury. The withholding tax in Morocco simulator shows the applicable rate and whether it is creditable.
Option for the 20% final levy — Art. 64-IV and 73-II-F-12°
Since the 2025 Finance Act, a landlord whose rents are subject to the Article 160 bis withholding tax may opt for a levy of 20% on the gross amount of those rents. This levy, applied by the tenant in place of the 10% or 15% withholding, is the only final regime applicable to property income (Art. 73, last paragraph):
- The income concerned is not included in global income and the landlord is exempt from filing the annual return for that portion of property income (Art. 86-6°)
- The 40% allowance does not apply: the 20% rate is levied on the gross amount
- The option is reserved for rents actually subject to withholding tax; a landlord whose tenant is a private individual cannot exercise it
- Procedure: application filed electronically with the tax administration against a receipt; a copy of the receipt is handed to the tenant at least 30 days before the rent due date of the month following the filing; the option takes effect from the month following delivery of the receipt (Art. 64-IV)
Progressive scale or 20% option: how to choose?
The real choice is not between the 10% and 15% rates, which are only an advance payment, but between the scale (on 60% of gross) and the 20% final levy (on 100% of gross). A 20% levy on gross is equivalent to 33.3% of net income: the option is therefore only worthwhile if the rents would be taxed under the scale at a marginal rate above 33.3%, i.e. in the 34% or 37% brackets.
When the progressive scale is more advantageous
The scale prevails whenever property income is the taxpayer’s sole or main income, or global income remains below 100,000 MAD: the first brackets (0%, 10%, 20%, 30%) apply to income already reduced by 40%. For example, a landlord whose only income is gross rent of 60,000 MAD has net income of 36,000 MAD, below the 40,000 MAD exempt bracket: they owe no income tax, and any 10% withholding suffered (6,000 MAD) is refunded.
When the 20% option is more advantageous
The option becomes attractive when the taxpayer already has high income (salaries, professional income) that places the rents in the 34% or 37% brackets of the scale. The gain remains moderate (34% × 60% = 20.4% of gross, 37% × 60% = 22.2% of gross, versus 20%) but comes with an exemption from filing for that income.
Worked example: rent of 150,000 MAD/year
Consider a landlord receiving gross annual rent of 150,000 MAD from a company tenant. The tenant applies the 15% withholding (gross income ≥ 120,000 MAD), i.e. 22,500 MAD paid to the Treasury on behalf of the landlord.
Scenario 1: the rent is the only income
| Step | Amount |
|---|---|
| Gross property income | 150,000 MAD |
| 40% allowance | − 60,000 MAD |
| Net taxable property income | 90,000 MAD |
| Income tax under the scale (10% of 20,000 + 20% of 20,000 + 30% of 10,000) | 9,000 MAD |
| Withholding tax already suffered | − 22,500 MAD |
| Excess subject to automatic refund | 13,500 MAD |
The option for the 20% final levy would have cost 30,000 MAD: it should be ruled out.
Scenario 2: the landlord also receives a net taxable salary of 200,000 MAD
| Step | Amount |
|---|---|
| Taxable global income (200,000 + 90,000) | 290,000 MAD |
| Income tax under the scale on global income | 79,900 MAD |
| Income tax under the scale on salary alone | 46,600 MAD |
| Additional income tax attributable to rents | 33,300 MAD |
| 15% withholding tax already suffered | − 22,500 MAD |
| Balance payable (excluding income tax withheld by the employer) | 10,800 MAD |
With the option for the final levy, the tax on the rents would have been 30,000 MAD (150,000 × 20%), with no return to file for that income, i.e. a saving of 3,300 MAD. The option is slightly more favourable here, because the rents are taxed under the scale in the 37% bracket.
Filing obligations
A taxpayer receiving property income must:
- The annual global income return is filed before 1 March for taxpayers without professional income, or before 1 May for taxpayers with professional income assessed under the actual or simplified net income regime. Property income subject to the final 20% rate benefits from the exemption under article 86-6° of the CGI.
- Report the gross property income received, the identity of the tenants and the nature of the properties let
- Credit the 10% or 15% withholding tax suffered against the income tax due, and obtain the automatic refund of any excess
- File via the SIMPL portal
- Supporting documents required for a tax audit must be retained for ten years under article 211 of the CGI. tax audit
The tenant required to apply the withholding pays it to the Treasury before the end of the following month, using a payment slip stating the gross amount of rents, the rents paid and the corresponding withholdings (Art. 174-IV). A document evidencing payment of the withholding is issued to the parties.
The rental value of property made available free of charge to a third party is taxable, except under article 62-I of the CGI: ascendants and descendants living there, State administrations and local authorities, public hospitals, State-supervised private assistance and charitable organizations, and recognized public-interest associations installing non-profit charitable institutions there.
Reference texts: General Tax Code (CGI) 2026 — Art. 61-I, Art. 64, Art. 73-I and II, Art. 82, Art. 86, Art. 160 bis, Art. 174-IV, Art. 241 bis — Circular Note No. 717
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Frequently asked questions
Is the 10% or 15% withholding on my rents final?
No. Since the 2023 Finance Act, the 10% (Art. 73-II-B-5°) and 15% (Art. 73-II-C-4°) rates no longer appear among the final levies listed in the last paragraph of Article 73. They constitute a withholding tax applied by the tenant (Art. 160 bis), creditable against the income tax computed under the scale; any excess is subject to automatic refund (Art. 241 bis). Only the optional 20% levy (Art. 64-IV and 73-II-F-12°) is final.
Does the 40% allowance really cover all expenses?
The 40% allowance covers the owner’s expenses on a flat-rate basis. Before applying it, gross income is reduced by expenses borne by the owner on behalf of tenants, including common service expenses and the municipal services tax when separately stated in the lease, under article 64-I of the CGI and Circular Note no. 717.
My tenant is a private individual: who pays the tax?
A non-professional private tenant applies no withholding tax. The landlord reports the rents in the annual global income return and pays income tax under the scale after the 40% allowance. The option for the 20% final levy is not available, as it is reserved for rents subject to the Article 160 bis withholding. Rental income covered by article 61-I-A-1°, B, C and D of the CGI benefits from a 40% allowance for taxation under the progressive scale. Agricultural property rentals under article 61-I-A-2° follow article 64-III, without that allowance.
Does the 40,000 MAD threshold exempt small rents?
No. Where the gross annual amount of rents paid to the same owner does not exceed 40,000 MAD, the legal-entity tenant is merely exempt from applying the withholding tax (Art. 160 bis, last paragraph). The rents remain taxable under the scale within global income. In practice, a landlord with no other income pays no income tax as long as net property income (60% of gross) does not exceed the 40,000 MAD exempt bracket, i.e. approximately 66,600 MAD of gross rents. Rental income covered by article 61-I-A-1°, B, C and D of the CGI benefits from a 40% allowance for taxation under the progressive scale. Agricultural property rentals under article 61-I-A-2° follow article 64-III, without that allowance.
Must I declare a property provided free of charge?
The rental value of property made available free of charge to a third party is taxable, except under article 62-I of the CGI: ascendants and descendants living there, State administrations and local authorities, public hospitals, State-supervised private assistance and charitable organizations, and recognized public-interest associations installing non-profit charitable institutions there.
