Property tax / Real estate tax in Dubai, tax rates
Dubai can be easily be classified as the ideal place for real estate investment – for professional investors as well as for end consumers.
When speaking about taxation on profits from real estate in Dubai - there is no tax on properties payable by the investor– neither from the income received from the sale, nor from the rental income. The yearly fixed tax on property which is applicable in some countries is not available in the UAE either.
There are only some minor taxes on properties which are paid on real estate. These taxes are the following:
- When you purchase or sell the property in Dubai – residential or commercial – there is the one-time fee of the land registry fee / tax which is 4%. 50% of this fee is paid by seller, and 50% - by the buyer. The fee is calculated from the contract sales-purchase price of the property and is payable to the land department at the day of property ownership transfer. In the real life in most of cases this tax is paid by buyer. This tax / fee is payable by physical persons or companies irrespectively.
- When renting a property in Dubai there is a tax of 5% from the tenancy contract value. This tax is payable by the tenant of the property and is automatically added to the utility bill issued to the tenant and it payable in instalments together with the water and electricity payments. In case of commercial properties this tax is 10%, its payment is processed same way as for residential properties.
Such simplified system of taxation of profits from real estate makes any type of yearly tax declarations unnecessary as taxes are collected automatically whereby these tax payments are absolutely minor in real terms.
In relation to inheritance – there are no inheritance taxes on real estate in Dubai ether – irrespective of the level of kinship. At the time of ownership transfer of the property under inheritance regular ownership transfer tax of 4% is applicable.
Taxation of real estate gains is independent on the residency of the property owner – inside or outside of the UAE. There are no limitations when transferring the money from the sale of the properties abroad, neither there are any restrictions on the currency conversions.
Under the applicable regulations the property in Dubai can be purchased by foreigners and used for private or business purposes (depending on property type) or leased out. Property can be purchased by a foreigner on his name or on a name of a company registered in UAE. Taxation regime of the real estate remains without any changes for private or for a company.