Is there a property tax in Dubai?
No property taxes in Dubai are directly levied on real estate since the UAE does not impose taxes on property ownership. In most countries, property taxes are an annual levy on the assessed value of real estate. These taxes serve as a primary revenue source for local governments. Property investors typically face various taxes, including property taxes, capital gains taxes, and income taxes on rental earnings, which can significantly diminish their returns on invested capital. The UAE’s economy is primarily supported by its significant oil and natural gas reserves, with oil revenues funding public services and infrastructure, reducing the need for property taxes in Dubai.
The absence of property taxes in Dubai enables investors to keep a significant portion of their profits, enhancing their overall ROI. However, specific fees and property taxes in Dubai are imposed on various real estate transactions, including the buying and selling properties.
Dubai Land Department (DLD) fees
The Dubai Land Department imposes a 4% registration fee to formalize property transactions legally, ensuring transparency and security. The Dubai Land Department fees not only provide buyers with official proof of ownership but also strengthen the regulation and reliability of the real estate market. The DLD charges this one-time registration fee to transfer property ownership, officially shared between buyer and seller, though in practice, it is usually paid by the buyer. Moreover, the Dubai Land Department registration fees for sale registration applications are indicated in the table below.
| Fee type | Description | Fee amount |
|---|---|---|
| Property registration fee | Charged when a property is registered in the name of the new owner. | 4% of the property’s sale value |
Administrative fees | To register a real estate unit or villa. | AED 250 ($68.08) |
| For a land plot map for areas outside Dubai Municipality. | AED 100 ($27.23) | |
| For a unified land plot map within Dubai Municipality. | AED 225 ($61.27) | |
| Additional knowledge fee per drawing. | AED 10 ($2.72) | |
| Additional innovation fee per drawing. | AED 10 ($2.72) | |
| Service partner fee | If the sale value is less than AED 500,000 ($136,150). | AED 2,000 ($545) + 5% VAT |
| If the sale value is AED 500,000 ($136,150) or more. | AED 4,000 ($1,089) + 5% VAT |
Value Added Tax (VAT) on property
The Value Added Tax (VAT) is one of the property taxes in Dubai, and it varies between residential and commercial real estate. Commercial property is defined as any building or part that does not qualify as a residential property, according to the Federal Tax Authority (FTA). This includes structures such as shops, offices, warehouses, hospitals, hotels, educational institutions, factories, and land used for commercial activities.
Commercial properties are subject to a 5% VAT on sales, leases, and associated services, and payment is required for landlords and real estate businesses with taxable supplies exceeding AED 375,000 ($102,113) annually.
On the other hand, residential properties and undeveloped land are primarily exempt from VAT. The Federal Tax Authority (FTA) defines residential properties in Dubai as buildings or units mainly intended for living, including apartments, villas, townhouses, residential complexes, and single-family homes.
Rental income tax
Rental income tax is also one of the property taxes in Dubai that is not imposed on real estate. No rental income tax in Dubai is levied on rental properties, whether residents or non-residents, making it an attractive location for real estate investment. Investors can earn rental income without tax liabilities. Although there is no rental income tax in Dubai, investors must adhere to local laws and regulations regarding property ownership and lease agreements. This includes registering leases with the appropriate authorities and following tenant rights and obligations outlined in Dubai’s tenancy laws.
Capital gains tax
Dubai does not have a capital gains tax on property sales for either residents or foreign investors. If you sell a property in Dubai, you will not be taxed on any profit (capital gain) from the sale, regardless of your residency status. With no capital gains tax, investors in Dubai can fully benefit from property value appreciation, making long-term investments in the city even more appealing.
Other transaction fees
Besides the few property taxes in Dubai on specific transactions, foreigners should be informed about other transaction fees when selling or buying properties. The table below provides a comprehensive overview of the costs associated with property mortgages in Dubai.
| Fee category | Description | Amount |
|---|---|---|
| Mortgage value fee | Fee for ordinary mortgages with an ordinary or usufruct title deed. | 0.25% of mortgage value |
| Title deed issuance fee | Issuance of title deed for ordinary mortgages. | AED 250 ($68.08) per title deed |
| Issuance of additional title deeds for ordinary mortgages. | AED 250 ($68.08) per title deed | |
| Knowledge fee | Knowledge fee for each drawing associated with the mortgage. | AED 10 ($2.72) per drawing |
| Innovation fee | Innovation fee for each drawing associated with the mortgage. | AED 10 ($2.72) per drawing |
| Service partners fee | Service fee plus VAT for service partners (Standard Mortgage). | AED 4,000 ($1,089) + 5% VAT |
| Service partners fee (Oqood) | Provisional service fee plus VAT for Oqood (off-plan properties). | AED 5,000 ($1,362) + 5% VAT |
Moreover, service charges for properties, although not considered property taxes in Dubai, are monthly maintenance fees paid to the Dubai Land Department to maintain common areas and amenities. These charges are calculated per square foot and typically range from AED 3 ($0.82) to AED 30 ($8.17), depending on the property’s size and community. Service charges are mandatory and based on the RERA service and maintenance index, and the total cost can vary by property type, including apartments and commercial spaces.
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Frequently Asked Questions (FAQs)
Is there a property tax in Dubai for foreigners?
No, there are no property taxes in Dubai for foreigners or locals. Dubai is known for its tax-free property environment, which means property owners do not pay annual property taxes on residential or commercial real estate.
What fees must I pay to the Dubai Land Department when buying property?
When buying property in Dubai, you must pay a 4% transfer fee to the Dubai Land Department (DLD) and an admin fee of AED 580 ($158) for completed properties or AED 40 ($10.89) for off-plan properties.
Do I have to pay tax on rental income in Dubai?
No, rental income in Dubai is not taxed for individuals, so residents and foreign investors can earn it tax-free.
Is there a capital gains tax when selling property in Dubai?
No, Dubai does not impose a capital gains tax on property sales, allowing residents and foreign investors to retain the full profit from property value appreciation.
