Property Taxes in Dubai

When considering the purchase of a house, apartment, or commercial property in Dubai, the initial takeaway is the absence of annual property tax within this emirate and the entirety of the UAE. Nonetheless, various obligatory payments are applicable for property owners, buyers, and tenants alike. Presented below is a comprehensive roster of taxes and fees that encompass not only property owners, but also other relevant parties. 

• Fees When Buying a Residential Property
• Fees on Inheritance and Donation of Residential Property
• Taxes and Fees When Buying Commercial Real Estate
• The Dubai Housing Fee
• Corporate tax
• Service Charge

Fees When Buying a Residential Property 

The purchaser of an apartment, villa, or townhouse is responsible for the following fees:

• Property Transfer Fee to Dubai Land Department (DLD): This fee equates to 4% of the property's value. In practice, it is often divided between the seller and the buyer.
• Administrative Fee: A sum of 430 AED ($117) is applicable for land plot purchases, while a fee of 580 AED ($158) is charged for the acquisition of an apartment or house. 
• Registration Fee: For properties valued up to 500,000 AED, a registration fee of 2,000 AED ($544) is levied; properties exceeding this value incur a fee of 4,000 AED ($1,088).
• Mortgage Registration Fee: A fee amounting to 0.25% of the mortgage value, along with an additional 290 AED ($79), is required.
• Title Deed Issuance Fee: An issuance fee of 260 AED ($70) is applicable for obtaining the title deed.

Fees on Inheritance and Donation of Residential Property

The heir or donee pays:

• Transfer Fee to DLD: 4% of the property value. 
• Title Deed Issuance Fee: 260 AED ($70).

Taxes and Fees When Buying Commercial Real Estate 

Buyers of properties intended for retail, storage, offices and other commercial purposes pay: 

• Transfer Fee to DLD: 4% of the property value.
• VAT: 5% of the property value.
• Registration Fee: When buying a property worth up to 500,000 AED — 2,000 AED ($544) + VAT, total of 2,100 AED ($572); if a property is worth more than 500,000 AED — 4,000 AED ($1,088) + VAT, total of 4,200 AED ($1,143).

The Dubai Housing Fee

This fee is paid by the tenant of any type of property, both residential and commercial.

• For tenants of flats and houses, the fee is 5% of the rent amount.
• For tenants of commercial property, the fee is 10% of the rent amount.

Corporate tax

Private investors and companies that receive income from real estate transactions over 375,000 AED per calendar year have to pay the corporate tax: 9% on taxable income above 375,000 AED.

Service Charge

Every proprietor of real estate, regardless of its type, is subject to an annual service charge encompassing a range of essential amenities. This charge contributes to various services including building and premises cleaning, waste disposal, maintenance of lifts, electrical systems, and water supply infrastructure, maintenance of swimming pools, fitness facilities, lobbies, parking areas, and other components within both residential and commercial complexes.

The service charge amount fluctuates based on several factors, including the property type, available amenities, the expanse of the surrounding area, and the proximity to the emirate's centre. Moreover, the building's number of floors plays a pivotal role: maintaining a villa proves notably more economical than upkeeping an apartment within a towering skyscraper.

Typically, the fee rate spans from 3 to 30 AED (equivalent to $0.82 to $8.20) per square foot annually (with one square foot equating to 0.093 square metres). The more affordable end of the spectrum is commonly observed in villa communities, townhouses, and low-rise complexes. Conversely, within high-rise structures, the rate tends to escalate. For instance, inhabitants of a condominium within the Burj Khalifa, the world's tallest skyscraper, shoulder an average of 72 AED ($19.60) per square foot per annum.

In a Nutshell

Despite the absence of a real estate ownership tax, individuals holding property, potential buyers, and tenants are still subject to certain expenditures linked to these real estate assets. Prior to embarking on any real estate transactions, prudent financial planning entails pre-calculating all requisite payments.

Cover photo: piqsels.com