One of the UAE's biggest draws for property investors is the light tax burden. 'Light' does not mean 'nothing', though. There are government fees, VAT in some cases, and corporate tax if you buy through a company. This guide sets out the full picture using official sources.
Is there an annual property tax?
Individual owners in Dubai and Sharjah do not pay a recurring annual tax on the value of their property, unlike the council tax or municipal property taxes common elsewhere. There are housing-related fees, however. In Dubai, the Dubai Municipality housing fee is 5% of annual rent, paid by the tenant through the DEWA bill, according to Gulf News.
Rent and resale profits for individuals: the corporate tax exclusion
The UAE introduced corporate tax under Federal Decree-Law No. 47 of 2022. The Federal Tax Authority's guide on Real Estate Investment income for natural persons explains that:
- An individual's income from selling, leasing, sub-leasing or renting UAE real estate is not subject to corporate tax, as long as the activity is not carried out through a licence and does not require one from a licensing authority.
- The basis for this is Cabinet Decision No. 49 of 2023.
So if you are an individual who owns an apartment or villa and rents it out or sells it at a profit, that income is outside UAE corporate tax under the current framework. The UAE also has no personal income tax.
When does this change?
- If your property activity is run through a business licence, or needs one. Brokerage, development and some management activities are examples.
- If you buy in a company's name.
Buying through a company
According to the UAE government portal and the Ministry of Finance, corporate tax is 0% on taxable income up to AED 375,000 and 9% above that. If you are thinking about holding property through a company, get advice from a registered tax adviser first. The treatment is very different from personal ownership.
VAT on property
According to the Federal Tax Authority:
- Residential sales and leases are generally exempt from VAT.
- The first supply of a residential building within three years of completion is zero-rated.
- Commercial property (offices, shops) is taxed at the standard 5% on sale or lease.
Brokerage and other service fees may carry VAT, so check quotes carefully.
Government fees when you buy
- Dubai: the DLD fee is 4% of the price, for both ready-property transfers and off-plan Oqood registration, plus admin fees.
- Sharjah: Khaleej Times reported a standard 4% registration fee, sometimes temporarily reduced during property exhibitions. Confirm the current rate with the Real Estate Registration Department.
Do not forget your home country
The UAE's rules do not override your home country's. Some countries tax citizens or residents on worldwide income. India, for example, taxes its tax residents this way. Ask an adviser at home about rent, gains and any tax treaty with the UAE.
Projects to compare
Whether you are buying a family home or an investment, you can compare Expo Valley Views in Expo City Dubai, Grand Polo Club & Resort by Emaar, and Hayyan in Sharjah.
Frequently asked questions
Do I pay capital gains tax when I sell my Dubai apartment?
If you are an individual and the sale is not done through a licensed activity, or one that needs a licence, the FTA's guidance says real estate investment income is not subject to corporate tax. Your home country may still tax the gain.
Is rental income taxed in the UAE?
For individuals in the same situation, no. The UAE has no personal income tax.
Do I pay VAT when buying a residential apartment?
Residential sales are generally exempt, and the first supply within three years of completion is zero-rated. Commercial property carries 5%.
Is it better to buy through a company?
Not necessarily. Companies pay 9% on taxable income above AED 375,000. Get professional tax advice first.
Want the full cost of a property before you commit, from fees to net yield? Contact Alroya Almomayaza Real Estate Brokers on WhatsApp at +971 58 558 9894.
