‘Do overseas investors pay taxes when they buy a UAE property?’
When buying property in the UAE, there are different fees to consider, depending on the type of property and in which emirate it is located.
For secondary market purchases in Dubai, the fees include the following: a 4 per cent transfer fee, a knowledge fee of Dh580 for an apartment or Dh430 for a land plot or villa, a broker's fee of 2 per cent plus VAT and a trustee registration fee of Dh4,000 plus VAT for property worth Dh500,000 and above or Dh2,000 plus VAT if it is priced below Dh500,000.
For mortgage purchases, the Dubai Land Department registration fee is 0.25 per cent of the loan amount. The finance arrangement fee is typically up to 1 per cent of the loan amount (this can vary) while the property valuation fee is between Dh2,500 to Dh3,500 plus VAT.
For off-plan purchases in Dubai, the transfer fee is 4 per cent but many developers are now offering incentives equal to this amount or waiving it completely.
Legal liabilities applicable in your home country would relate to earnings from rental income or any capital appreciation when selling the property in the future
For property purchases in Abu Dhabi, the fees are slightly cheaper. The Abu Dhabi municipality fee, which is the transfer fee, is 2 per cent of the purchase price, the brokerage fee is 2 per cent plus VAT and the title deed cost is Dh1,000.
For mortgage purchases, the mortgage registration fee is 0.1 per cent of the purchase price. The finance arrangement fee is usually up to 1 per cent of the loan amount plus VAT. The bank valuation fees are approximately Dh2,500 to Dh3,000 plus VAT.
Buying a property in the UAE does not attract any taxes. However, as a foreign investor, you must consider the legal liabilities that might be applicable in your home country. These liabilities would relate to earnings from rental income or any capital appreciation when selling the property in the future.
It is, therefore, advisable to seek specific information from tax consultants in your country before buying a property in the UAE.
The only other fees to consider, aside from monthly utility bills for water, electricity and cooling charges, would be the annual service fees. These vary greatly depending on the area and property. Details of Dubai service charges can be found on the DLD website or on the Dubai Rest app.
There could also be some membership fees to consider for access to amenities, such as the beach or beach club, in some communities.