Real estate boost? | L’Economiste

In the midst of a flood of tax rate hikes, there are a few hikes that stand out as exceptions. These include the reduction in the scale of taxation of the net capital gain generated or observed by the tax authorities on the occasion of the sale of requalified bare land inside cities.

In the case of a sale, the profits that were made were, since January 01, 2013, subject to taxation at a rate of contribution in full discharge of liabilities of 30% in respect of land profits. The same scale also applied to the transfer of real property rights on this same category of land. This is a relatively high rate and one which was explained, according to the Minister of Finance in office in 2013, by the fact that landowners whose land has been integrated into the urban area must contribute to the national tax effort by paying a surplus of tax (i.e. 10% more than for a normal transaction), since the requalification of land in the urban perimeter is considered as a land rent thanks to the presence in urban settings which allows the owners of such lands to become sometimes millionaires overnight. Since January 01, 2023, this scale has been aligned with the general law, which sets a rate of 20% of the capital gain, article 73-II-G-7 of the General Tax Code having been repealed by the 2023 Appropriations Bill. In addition, since 2018, there is no longer any question of income tax being defined according to the duration of ownership of the land transferred: 20% (if this duration is less than four years), 25% (4 to 6 years) and 30% (beyond 6 years). In addition, from this year onwards, and following the repeal of Article 73-II-G-7, one should no longer speak of “first sale” , but simply of transfer, subject to a uniform scale of 20%. Will this measure contribute to the smoothing of land transactions and therefore to the revival of the real estate sector? The first advantage of this provision is obviously that it will make it possible to pay 20% tax on the net capital gain instead of 30%. “But should we go as far as saying that it will accelerate land sales, I remain skeptical about that. Being myself the owner of this category of land, I can say that the tax reduction is not the triggering factor. You must first need to sell and then find a good price since land remains a safe haven that never loses its value”, says a landowner and property developer. “This measure is likely to make the real estate market more fluid, but is it enough to give a new momentum to the real estate sector? I highly doubt it. It is not the only option to be explored. The Government must release the land of collective lands in their various categories and allow land developers to access them on advantageous terms”. As a reminder, Collective land is owned by ethnic communities who have a right of usufruct or enjoyment.

Hassan EL ARIF