Truth about real estate tax regime in UAE

The United Arab Emirates attracts foreign buyers of real estate from all over the world. It is connected to the fact that one of the most favorable tax regimes has been created here. The source – https://emirates.estate/ – will tell you about the taxes in the UAE that you should know about before buying real estate.

The UAE is not only a year-round summer, the latest technologies, a warm sea, the highest and most original skyscrapers, as well as the concentration of the richest people in the world. Foreigners make a choice in favor of Arab real estate, as there is no purchase tax, annual property ownership tax, capital gains tax, inheritance, donation, as well as income and corporate taxes, although some payments are still retained.

At the same time, all this applies to both legal entities and individuals, foreigners and local residents. The country’s authorities understand that zero income tax in the UAE is one of the factors in favor of foreigners moving to the country.

Real estate purchase tax 

In Dubai, taxes are often higher, because it is this emirate that attracts attention more than others: interesting real estate projects, offices of major corporations, branches of international universities, schools are located here.

In all the United Arab Emirates, a transfer fee is paid when buying real estate. In Dubai since 2013, it is 4% of the total cost of the property and it is 2% in Abu Dhabi. Fee payment is made in the Land Department of the Emirate in the process of concluding a purchase or sale transaction. Besides, when paying the transfer fee, it will be necessary to pay the administrative fee – AED 540 (about USD 150), which is paid by the buyer. In the case when it comes to inheritance or donation of housing, local legislation does not provide for any tax payments.

In addition to the transfer fee, there are also registration fees: a fixed one-time payment, which is AED 2,000 (USD 545) for real estate worth up to AED 500,000 and AED 4,000 (USD 1,090) for housing more expensive than AED 500,000 (USD 136,000). A fee is also paid when obtaining a certificate of ownership, which usually takes about three days to complete after the actual signing of the transaction.

According to the legislative norms of the UAE, when concluding a purchase and sale agreement, a licensed real estate agent must be present at the transaction. When purchasing real estate on the primary market, the seller often takes over the payment of real estate services (the commission is 2% of the transaction amount). If the property was bought through mortgage loan, then in addition to the above-mentioned fees, the buyer must pay a commission for processing the loan (1% of its amount). When buying a house on credit, the amount of the registration fee changes and it will be 0.25% of the loan amount and AED 290 (USD 80).

Real estate sale expenses 

If a property is being sold at the construction stage or after commissioning, it is necessary to obtain a certificate from the developer that there are no objections. It will amount to AED 5,000 (USD 1,365). In case of sale of the finished property, it will cost AED 500 (AED 135). When alienating real estate in the UAE, you will need to pay a tax of 4% in Dubai and 2% in Abu Dhabi, while no stamp duty is charged when selling real estate.

Real estate ownership expenses 

The owner of a property in Dubai must pay a fee in the form of a contribution for various services provided by the state, such as street lighting, waste collection, etc., Its amount is 10% of the bill. For an apartment in Dubai, it will cost AED 128 (USD 35) per sq. m per month, and in the case of a private house, it is AED 33 (USD 9) per sq. m of the land plot. For an apartment of 75 sq. m, the annual fee will be about AED 9,600 (USD 2,600).

There is another expense line in the Emirates: if a homeowner uses a centralized cooling system, then his utility bills may be higher than those who use air conditioners. In summer, this amount exceeds USD 100 per month. In winter the payment will be about USD 50.

Our assistance in choosing real estate 

When buying an apartment, it is important not only to have information about the state of the market and prices, but also to know the local legislation. The specialists of Emirates.Estate will provide professional assistance with the property variants and the execution of the transaction. You can get acquainted with the current offers in real time.