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UAE taxes

02.02.2021
Author: Dinara Gracheva
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The United Arab Emirates attracts foreign buyers of real estate from all over the world, including the fact that it has created one of the most favorable tax regimes, which also applies to home buyers.

The UAE is not only a year-round summer, the latest technology, a warm sea, the tallest and most original skyscrapers, the concentration of the richest people in the world. This is one of the few countries where you can now fly from Russia and the CIS countries - during the period of closed international borders - and choose a property to buy not by video broadcast (which is not suitable for everyone), but with your own eyes. Foreigners make a choice in favor of the UAE, also because there is no purchase tax, annual property ownership tax, capital gains tax, inheritance tax, gift tax, as well as income and corporate taxes, although some payments still remain.

Buy real estate in the UAE

Moreover, 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. The country earns mainly from the oil industry and uses a tax-free policy to attract qualified professionals and global companies to further develop the economy.

Real estate purchase taxes

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

In all United Arab Emirates, a registration fee (transfer fee) is paid when buying a property. In Dubai since 2013, it accounts for 4% of the total cost of the property, 2% - in Abu Dhabi. Payment of the fee is made at the Land Department of the Emirate directly in the process of concluding a purchase or sale transaction. This amount can be either proportionally divided between the buyer and the seller, or paid by the buyer in full - it depends on the terms of the contract.

Also, when paying the registration fee, you will need to pay an administrative fee - 540 dirham (about $ 150), which the buyer takes upon himself. In the case when it comes to inheritance or donation of housing, local legislation does not provide for any tax payments. The only line of expenses will be the already mentioned payment of the registration fee in the amount of 4% of the value of the property.

In addition to the registration fee, there is also a registration fee - a fixed one-time payment of AED 2,000 ($ 545) for properties under AED 500,000 and AED 4,000 ($ 1,090) for properties over AED 500,000 ($ 136,000) ). A fee is also paid when issuing a certificate of ownership, which usually takes about three days to complete after the actual signing of the deal. A new homeowner must submit a request to the local court and pay a fee of AED 250 ($ 70) to obtain this title deed.

Buy real estate in the UAE

According to the UAE legislation, a licensed realtor must be present at the conclusion of the sale and purchase agreement. When purchasing real estate in the primary market, the seller often undertakes the payment for real estate services (the commission is 2% of the transaction amount). If real estate is bought on the secondary market, then this amount is divided equally between the buyer and the seller.

If the property was purchased through mortgage lending, then in addition to the above fees, the buyer must pay a commission for the loan (1% of its amount). When buying a home on credit, the registration fee changes - it will be 0.25% of the loan amount and 290 dirhams ($ 80).

In the case when it comes to acquiring a room in a five-star hotel, then in this case there is no need to pay a 5% tax on the purchase of a commercial property.

Ownership costs

The owner of real estate in Dubai must pay a fee in the form of a fee for various services provided by the government - street lighting, waste collection, etc., its amount is 10% of the invoice. For an apartment in Dubai, it will cost 128 dirhams ($ 35) per sqm per month, and in the case of a private house - 33 dirhams ($ 9) per sqm of land for the house. For an apartment of 75 square meters, the annual fee will be about AED 9600 ($ 2600)

Utility bills are calculated based on meter readings (water and electricity, usually $ 50 for each for one person living, while they are paid only by foreigners), the area of the property, the number of registered people, and the duration of ownership of a particular apartment or home. Usually the bill is $ 100-200, but do not forget that the Internet, telephone and television are paid separately - 800 dirhams ($ 220) monthly. Real estate insurance in all emirates of the UAE is carried out on a voluntary basis, the minimum payment is 400 dirhams (110 dollars) annually.

In the Emirates, there is another expense line: if a homeowner uses a centralized cooling system, their utility bills may be higher than those of those using air conditioning. In summer, this amount exceeds $ 100 per month, in winter, the payment will be about $ 50. Formally, this is not considered a tax - it is treated as a payment for services to the centralized cooling companies for their investments in innovative technologies.

Buy real estate in the UAE

Rental tax

Rental tax is in effect in most emirates, but if in Dubai it is 5% of the annual rent and is added to the tenant's bill, then in Abu Dhabi it is less - 3%. But it is levied only from foreigners, the locals do not pay this tax. And in the case of Sharjah, both foreigners and locals pay the same 2% of the annual rent as rental tax. In the UAE, all utility costs and deposits are paid by the tenant.

Real estate sale expenses

If the object is sold under construction or after commissioning, then you must obtain a certificate from the developer of no objection - this will be 5,000 dirhams (1,365 dollars). In the case of the sale of finished real estate, obtaining such a document will cost 500 dirhams (135 dollars). When alienating real estate in the UAE, you will need to pay a tax of 4% in Dubai and 2% in Abu Dhabi, while there is no stamp duty on the sale of real estate.

Thank you for your help in preparing the material:

Elena Timchenko, Managing Partner of Royal Home Real Estate

Vladimir Minaev, expert at Metropolitan Premuim Propertie

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