From July 1st onwards, there will be a profound change in the way real estate is sold. The 2024 Finance Act introduced a measure in Article 139-IV of the General Tax Code (CGI) designed to improve the collection and management of local taxes: housing tax, communal services tax and tax on undeveloped urban land.
Public notaries, religious notaries («adouls»), lawyers accredited by the Court of Cassation and any other person exercising notarial functions will no longer be able to draw up any deeds unless they can produce a certificate from the tax collection authorities showing that the taxes relating to the real estate in question have been paid for the year of transfer and for the years not barred by the statute of limitations. Failing this, these persons will be jointly and severally liable with the transferees for the payment of tax debts. Another new feature of the reform is the obligation to mention the article number of the housing tax and communal services tax on the deeds drawn up.
The circular issued by the General Tax Directorate (DGI) has finally provided the necessary clarifications. These concern buildings built by property developers as part of their stock and intended for sale as part of their professional activity. As a result, once a building permit has been issued or individual land titles have been drawn up, developers will have to apply to the relevant departments for the housing and communal services tax item number for each unit, for identification purposes. The tax will only be issued once the property has been sold to customers. This provision will enable thousands of properties to be registered for local taxes. Until now, these new homes were sold without ever being registered for local taxes, and it was only when they were resold that the seller was required to pay four years’ worth of unpaid taxes, which explains the low yield of the housing and communal services taxes, given the size of the existing property stock.
The circular issued by the tax authorities has put an end to the apprehensions of professionals who had a rather narrow interpretation of the wording of the provision. Thus, the obligation to produce a tax receipt will not apply to other types of deeds concerning sales. This excludes deeds of sale, promises of sale or purchase, reservation contracts or even preliminary sales contracts.
Hassan EL ARIF
