Property Taxes in UAE: What Buyers and Investors Should Know

There is no annual property tax on owners in Dubai or the wider UAE: you do not pay a yearly tax based on your property's value. Instead you pay a one-off transfer fee when you buy, a monthly housing or municipality fee through your utility bill, service charges, and VAT on some commercial property deals.

Individuals who own property in their personal name are also outside the UAE's Corporate Tax on rent and sale proceeds. Companies that own property are not. This guide explains each charge, who pays it, and where to confirm it.

This is general information, not tax advice. Rules change and your position depends on how you hold the property, so check your case with the Federal Tax Authority (FTA) or a registered tax adviser.

The largest government charge on a Dubai purchase is the Dubai Land Department (DLD) transfer fee of 4% of the sale value. The DLD's sale registration service lists it as 2% for the seller and 2% for the buyer; in practice it is customary for the buyer to pay the full 4%, although the two sides can agree otherwise.

You pay it once, when the sale is registered. It is not charged again while you own the property. Registration also carries fixed title deed and trustee office fees.

For the full list of purchase costs, including agency commission and mortgage fees, see our Property Buying Costs in Dubai guide.

The closest thing Dubai has to a recurring property tax is the housing fee, often called the municipality fee. It is charged by Dubai Municipality, collected by DEWA and appears on your monthly electricity and water bill.

Gulf News reported in 2020 that the fee is levied under the Dubai Municipality Revenue Law of 1962 and is charged at:

• Tenants: 5% of the annual rent, split into 12 monthly instalments.
• Expatriate owners living in their own property: 0.5% of the purchase price a year, also split monthly. A Dubai Municipality official gave the same method in 2008: 10% of the price is treated as annual rent, and the fee is 5% of that.
• The fee follows the resident. If you rent your property out, the tenant pays the 5% fee through their own DEWA account.
• If you think you are overcharged, Gulf News reports you can ask DEWA to have the municipality review the calculation, with your tenancy contract and title deed, and claim a refund of any overpayment.

Abu Dhabi charges expatriate tenants a municipality fee of 3% of the annual rent. It is billed monthly through the water and electricity bill and is based on the rent in the tenant's registered Tawtheeq contract.

Homeowners living in their own property do not pay it. The National reported this in 2017, quoting a spokesman for the Department of Municipal Affairs and Transport, who said the fee covers tenancy agreements only.

Other emirates set their own fees. Check with the relevant land or municipal department before you buy or rent outside Dubai and Abu Dhabi.

VAT in the UAE is 5%, but most residential property is not charged at that rate. The FTA's Real Estate VAT Guide (VATGRE1) sets out the treatment:

• New residential property: the first supply, by sale or lease, within 3 years of the building's completion is zero-rated (0%).
• Existing residential property: any later sale or lease is exempt from VAT, even if it happens within those 3 years. So most resale homes and residential rents carry no VAT.
• Commercial property: sales and leases of offices, shops, warehouses and other non-residential buildings are standard-rated at 5%.
• Bare land: exempt.
• Service charges for the upkeep of communal areas are standard-rated at 5%, even in residential buildings, because they pay for services rather than for the home itself.
• Property in a VAT Designated Zone can be outside the scope of VAT; check the specific rules.

No, not if you hold the property in your personal name and do not need a trade licence to rent or sell it. Under Cabinet Decision No. 49 of 2023, income a natural person earns from selling, leasing, sub-leasing or renting UAE property (Real Estate Investment) is excluded from Corporate Tax. The FTA's guide CTGREI1 says this applies regardless of how many properties you own or how much you earn.

The FTA also lists wages and personal investment income as outside Corporate Tax for individuals. An individual only comes within Corporate Tax if they conduct a business in the UAE and their turnover from it is above AED 1 million in a calendar year.

The exclusion is lost if the activity is carried out, or must be carried out, under a licence. Running a licensed property business or holiday-home business can bring the income into scope. Check the FTA guide before you assume the exclusion applies to you.

Companies are treated differently. UAE Corporate Tax applies to companies and other juridical persons, and property income is part of their taxable income. The FTA's Corporate Tax General Guide sets the rate at 0% on the first AED 375,000 of taxable income and 9% above that.

A company that sells or leases commercial property may also have to charge 5% VAT and register for VAT. Free zone, small business and group rules can change the result, so get professional advice before you buy through a company.

If you live in another country, it may tax your UAE rent or gains even though the UAE does not. Check with an adviser in your country of tax residence.

• Dubai Land Department, Property Sale Registration (fees)
• Gulf News, Ask the law: housing fee refund in Dubai (17 September 2020)
• Gulf News, Housing fee: Homeowners must pay too (23 October 2008)
• The National, Homeowners off the hook for Abu Dhabi's three per cent municipality fee (4 January 2017)
• Federal Tax Authority, VAT Guide: Real Estate (VATGRE1)
• Federal Tax Authority, Real Estate Investment for Natural Persons (CTGREI1)
• Federal Tax Authority, Corporate Tax Basis for Natural Persons
• Federal Tax Authority, Corporate Tax General Guide (CTGGCT1)
• UAE Ministry of Finance, Corporate Tax announcement