Tax rates for property in UAE

Real Estate sector plays a very important role in economy and VAT has made a huge impact on this sector.

Supply of real estate is treated as supply of goods. Real estate property includes the land as well as the rights or interests in the land. Hence the supply of real estate includes transfer of ownership of property (both residential and commercial) and giving the right to use the property i.e. renting or leasing of property (both residential and commercial).

Purchase or renting of residential property for own living, nursing homes, student and employee accommodations are exempt from VAT i.e. VAT will not be applicable on supply of residential property. Sale of bare land is also exempt from VAT. Residential property leased out on for less than six months to a person living not possessing Emirates ID, will be liable to VAT at 5%.

The first time sale or rental of residential real estate within three years from completion is applicable to VAT at zero rate. Further, first sale or rental of buildings given for charity purposes and first supply of buildings converted from commercial to residential are also zero rated.

Refund of VAT paid on construction of residential house to UAE Nationals. All the UAE nationals are eligible for refund of VAT paid on expenses for construction of their residential property by way of an application to FTA.

What we can do is to help you:

• Determining applicability of the nature of transaction
• Determining the applicability of tax rate on the transaction
• Determining the eligibility of Input Tax Credit on the expenses paid
• Determining the date of supply i.e. when the tax is payable on supply of real estate and place of supply of real estate
• Application of VAT registration and filing of VAT returns
• To assist in applying refund by UAE Nationals for VAT paid on construction of residential

Our team of experts will help you in all your VAT inquiries. Contact us to know more