Pitfalls of buying real estate in the UAE. Taxation
The United Arab Emirates attracts foreign buyers of real estate from all over the world. You don’t have to pay taxes but utilities and fees are not that cheap. Let’s figure out why there are so many buyers.
Purchase real estate in the UAE
Foreigners make a choice in favor of this country, also because there are no taxes for purchasing, annual maintenance, inheritance, acquisition of real estate by deed, etc. However, you should keep in mind that some payments still remain. So, many wonder why not to buy villas in Dubai to a foreigner if it is so beneficial.
The fact that you don’t have to pay for your apartment in the UAE is the key factor why foreign buyers are moving to the country. It is well known that the UAE earns mainly from the oil industry and uses a tax-free policy to attract qualified specialists and global companies to further develop the economy. That is why the most favorable conditions are created.
Purchase taxes –
In Dubai, taxes are often higher, since here are placed the most interesting real estate objects like offices, large corporations, international universities, fancy restaurants, etc.
Only the transfer fee should be paid when you are buying a property. In Dubai, it costs 4% from the total sum, in Abu Dhabi it is 2%. This amount can be either proportionally divided between the buyer and the seller, or paid only by the buyer. It depends on the terms of the contract.
You will also need to pay an administration fee of AED 540 (about $ 150).
In the case when it comes to inheritance or donation of housing, local legislation does not provide for any tax payments.
In addition, you will have to pay a registration fee, which is 2,000 dirhams ($ 545) for properties worth up to 500,000 dirhams and 4,000 dirhams (1,090 dollars) for housing over 500,000 dirhams (136,000 dollars).
A fee is also paid when issuing a certificate of ownership. A new homeowner must submit a request to the local court and pay a fee of AED 250 ($ 70) to obtain this title deed.
Ownership costs
A property owner in Dubai has to pay for street lighting, waste collection, etc. You will have to pay an annual fee for the apartment.
Utility bills are calculated based on meter readings (water and electricity, usually $ 50 for each for one person living, and only foreigners pay for them). Usually the bill is $ 100-200, but do not forget that the Internet, telephone and television are paid separately, which is 800 dirhams ($ 220) monthly.
Rental tax –
The rental tax in Dubai is 5%, while in Abu Dhabi it is less than 3%. But it is levied only from foreigners as the locals do not pay this tax. In the UAE, all utility costs and deposits are paid by the tenant.
Real estate sale expenses –
If the object is sold under construction or after commissioning, then you must obtain a certificate from the developer of no objection. It will cost 5,000 dirhams (1,365 dollars). In the case of the sale of completed real estate, obtaining such a document will cost 500 dirhams (135 dollars). When alienating real estate in the UAE, you will need to pay a tax of 4% in Dubai and 2% in Abu Dhabi.
For more information go at https://emirates.estate/