What Are The Property Taxes In UAE? – Things To Avoid

No one likes taxes.

In some countries, the taxes can be very high. That is one of the reasons why the UAE is so attractive to ex-pats. The taxation system in this country is very low which makes this city an almost ideal place to live.

The good news about property tax in UAE is that there are no property taxes. There is a property transfer fee, which could be called a tax, but that is minimal in comparison to other countries.

Keep reading to find out more about these taxes and how they would apply to you if you relocated to the UAE.

Is There Property Tax In UAE

The good news is that there is no property tax in this country. But that does not mean there are no taxes associated with real property. There will be a 4% fee when you transfer ownership of any given residential property.

This transfer fee is supposed to be shared 50-50 between the buyer and the seller, however, the reality is that the buyer ends up shouldering the whole burden of this fee.

That 4% fee is based on the sales price of the home, villa, or apartment. It is paid for in UAE dollars so ex-pats may not feel as big of a bite as they would if the fee was paid in their native currency.

If you were renting, then you would pay a rental tax. That fee is roughly 3% in the UAE and that 3% fee is off the annual rental amount, not the monthly rental amount. If you rent in Dubai, the rental fee will be 4%.

Make sure to factor in these fees when you buy or rent a place in the UAE.

Property Tax In Dubai For Foreigners

The tax laws apply to ex-pats as well as citizens. There is no property tax for foreigners. However, as explained in the last section, foreigners would have to pay a property transfer fee if they buy or sell a house or villa, and so on.

The same rental tax or fee is also paid by ex-pats. The setup is the same as the ex-pat would pay between 3 and 5% depending on where they are living, on their annual rent amount.

Then there is no inheritance tax on the property either. If you do buy in the UAE, then make sure you have a will. If there is no will, the inheritance transfer will follow Islamic Sharr’a laws.

While the UAE does not have an income tax for foreigners, you may still be liable to pay an income tax in your native country. The UAE does have many double taxation agreements with other countries and you should look into that legal issue.

Rental income may be taxed by your native country even if you are still living in the UAE. There are also no capital gains taxes unless your company has to pay income taxes.

The tax system seems to be straightforward for both citizens and ex-pats. You should not need to hire an accountant to do any of your tax paperwork as there is very little paperwork to file.

Are There Property Taxes In Dubai

Not really. Dubai seems to follow the UAE when it comes to paying taxes on the property. There is a 4% property transfer fee paid by both the seller and the buyer, with the buyer usually paying 100% of this fee.

Then there is the rental fee that is paid by the tenant and it is based on the annual rental amount not the monthly. The charge for this fee is 5% in Dubai. But these are not the only fees one has to pay when they transfer property.

While there is no inheritance tax, the transfer of the property’s ownership from the deceased to the beneficiary will still be charged 4% and this should off the value of the property.

When it comes to transferring money from the sale of your property, you will find that there is no capital gains tax applied to real estate sales. There is one exception to this rule and it applies to those companies that are liable to pay income or bank taxes.

You can also transfer as much money out of the country as you want. There seems to be no restriction on this banking move. Also, you will find that there are no currency conversion restrictions either.

On top of all this, there should be no Stamp Duty tax applied whether you are a foreigner or a citizen of the country. But like everything else, double-check on the tax laws as they can change at any time.

Stay current so you do not get yourself in trouble in the UAE or Dubai.

There Are Taxes On Commercial Entities

This is what you have to watch out for if you are opening a business or branch office in the UAE or Dubai. There will be a different tax standard for commercial interests.

For example, rental tax for commercial interests is at 10% not the standard 3-5% for residential tenants. Then any corporate tax that may be levied is usually done to oil companies and some foreign banks.

Your company may not see that many taxes unless it qualifies to pay an income tax. You may have to pay a capital gains tax if your company is liable for income tax.

Some Final Words

Navigating the tax system can be tricky when you move to a foreign country. That is why you need the helping hand of the professionals that have done it all. Our company has over 10 years of handling property sales and taxes in the UAE and Dubai.

Take the time to contact one of our expert Dubai agents and talk to them about your plans for that area. They will be glad to get you all the information you need to know and help you sort out all the details.

Call today and see what our experts can do for you.

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