When you buy or own property in the UAE, there are certain fees and charges you need to be aware of. The good news is that there’s no annual property tax or income tax. But how much of your earnings will the government actually claim from your real estate investment? That’s where many investors start to feel confused.
In the UAE, real estate taxation isn’t as straightforward as paying a fixed amount each year. Instead, it’s a mix of zero-tax policies, transaction fees, and evolving corporate regulations.
In this article, we’ll break down everything you need to know about the taxes and fees involved in buying and owning real estate in the UAE, from what’s not taxed, to when you do pay, and how to plan your investment strategy wisely in Dubai.
The “No Tax” Myth: What You’re Really Paying For
Many people move to Dubai believing there’s no property tax here.
And yes, technically, there’s no annual property tax or capital gains tax on individuals. You won’t get a yearly bill from the government asking for a property levy like you would in London or New York.
But: There are one-time fees and ongoing charges that act like mini-taxes.
For example: If you’re buying an AED 2 million apartment in Business Bay. Here’s what you’ll pay:
These are not taxes in the traditional sense, but they’re mandatory transaction costs that every buyer must plan for.
Why Tax-Free Doesn’t Mean Cost-Free
A British investor once told me, I made a great 7% rental yield in Dubai. Until I realized I was losing 1.5% annually on maintenance, service fees, and housing taxes.
That’s when it clicked for him: the UAE is tax-light, not tax-absent.
What You’ll Pay Yearly:
- Service charges: Typically AED 10–25 per sq. ft., depending on building quality.
- Housing / Municipality fees: Around 5% of annual rent, billed via DEWA for tenants.
- Utilities & maintenance: Especially if you rent it out, expect regular upkeep costs.
If your property earns AED 80,000 in annual rent, your hidden costs might total AED 10,000–12,000. That’s still better than paying a 20% property tax abroad.
What You Don’t Pay
- No Income Tax on Rental Income
- No Capital Gains Tax
- No Annual Property Tax
- Wealth Tax
- Inheritance Tax
VAT and Property: When 5% Matters
Since 2018, the UAE has a 5% VAT (Value Added Tax) system.
But don’t panic, it mostly applies to commercial or newly built residential properties.
Here’s how it works:
- Residential sales & leases on used properties: VAT-exempt, means if you buy a used apartment from an existing owner so no VAT is charged.
- New residential first sale: Zero-rated, means if Emaar sells you a brand-new apartment at handover so you don’t pay VAT, but Emaar can recover VAT from the government.
- Commercial property: 5% VAT applicable. If you buy a shop in Business Bay for AED 1 million, you’ll pay AED 50,000 VAT.
- Mixed-use property: VAT applies proportionally. For example, Ground floor shops = 5% VAT and Upper-floor apartments = VAT-exempt
If you’re leasing commercial space, you may register for VAT and reclaim input tax.
Corporate Tax and Real Estate 2025 Update
This is where things get interesting.
From June 2023, the UAE introduced a 9% Corporate Tax on business profits above AED 375,000.
But here’s the question investors keep asking: Does this apply to real estate income?
If You’re an Individual Investor
Good news is: If you’re simply renting out your personal property without a commercial license, your income is not taxable under corporate tax law.
If You’re a Business Entity
If a company is UAE-based or foreign, holds property for business activity like leasing, property development, flipping so that income can be taxable under the 9% rule.
Non-Resident Investors
If you’re a foreign investor who owns UAE property but doesn’t have a UAE business, you’re usually exempt.
However, if your property generates regular business income like multiple short-term rentals through a company, it may create a nexus in UAE, making you taxable.
Depreciation Rules (MD 173)
Under Ministerial Decision No. 173, companies holding real estate at fair value can now claim a notional depreciation of 4% per year.
This means if your company owns a building worth AED 10 million, you can deduct AED 400,000 annually from taxable income, even if no actual depreciation was booked in your financials.
Sounds technical? Here’s the simple version:
- It reduces your taxable profit.
- It increases your post-tax ROI.
- It makes property ownership more tax-efficient for corporate entities.
But caution:
- If you later sell the property, that depreciation might be added back to taxable income. So, plan your exit carefully.
Holding Property Smartly: Structures That Save You Money
The way you own property can drastically change your tax outcome.
Option 1: Personal Ownership
Best for individuals buying residential property.
- Simple
- No corporate tax
- Limited liability protection
Option 2: UAE Company
Best for commercial, mixed-use, or multiple property portfolios.
- Can claim expenses, depreciation, and structured profit.
- Suitable for investors with >AED 375,000 turnover
- But requires compliance, accounting, and possible tax filing.
Option 3: Free Zone Entity
Some free zones like DIFC, ADGM allow real estate investment with special tax exemptions. Possible 0% corporate tax if qualifying income.
But restricted to specific zones & regulations.
Option 4: Offshore / Holding Company
Popular for foreign investors. Helps with inheritance, transfer planning. But it is limited to local lending, and may have setup costs.
Case Study: How Tax Affects ROI
Let’s take two investors, both buying an AED 2 million property in Dubai Marina.
Small difference, but on bigger portfolios, this matters.
UAE Property Fees & Taxes by Emirate
While Dubai leads the property market, other emirates like Abu Dhabi, Sharjah, and Ras Al Khaimah have their own rules and fees.
Will the UAE Introduce Property Taxes?
It’s the question every investor asks, Will the UAE ever add a full property tax?
For now, the government has clarified: no property tax is planned. But as the economy diversifies, new policies like green fees or sustainability-linked levies could appear in the future. The focus, however, remains on attracting global investors, so any changes will likely stay moderate and business-friendly.
FAQs
Do I need to pay tax on rental income in the UAE?
No, there is no need to pay income tax individually as a landlord in the UAE on rental income.
Is there a property tax in Dubai or Abu Dhabi?
No, the UAE doesn’t impose taxes annually, but transfer and registration fees may apply only once.
Does corporate tax apply to real estate investors?
Only if the investor operates through a company conducting real estate as a business; individual ownership is exempt.
Conclusion
The UAE continues to stand out globally for its investor-friendly environment. While taxes exist in small forms, they’re transparent, predictable, and far lower than most global markets.
So yes, you have to pay a few fees here and there, but what you get in return is stability, safety, and strong rental yields.
Thinking about your next property move?
Explore communities, run the numbers, and talk to Habico Properties experts before you buy, because in Dubai, informed investors always win.