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Jan 16, 2025
Due to its no-taxation policy in the past several years, the UAE has been one of the most favored destinations for purchasing real estate. Unlike other countries, the UAE has a transparent real estate taxation system and has a simple property value to buy. It also entitles you to relax on its registration fee, which is considerably uncomplicated, leading to attracting millions of investors worldwide. So, if you desire to purchase a property in the United Arab Emirates, understand the rules where the seller and buyer should split the DLD fee by each paying 2% of the property prices. The regular cost is 4% of the DLD fee, which the buyer pays, and this fee has stayed the same over the past 10 years. However, suppose you require information about what Taxes and Fees Are Applicable to Real Estate Transactions in the UAE. In that case, you are in the right place where you will learn more specific information before purchasing a property in the UAE.
Most buyers, sellers, and investors must know several taxes and fees when purchasing or selling real estate in the UAE. The UAE offers a tax-friendly environment, especially for property investors, with no personal income or capital gains tax on property transactions. However, learning the specific transaction-related fees that apply and understanding these costs is crucial to anyone curious to be involved in a real estate deal. Hence, to avoid unnecessary confusion, let's quickly read up on the valuable points below.
As mentioned earlier, the registration fee is the primary fee involved in real estate transactions in the UAE. This fee is charged by the respective land department or real estate registration authority, and its amount varies depending on the emirate. The Dubai Land Department (DLD) imposes a registration fee of 4% of the property's purchase price, typically split between the buyer and seller at 2% of the total transaction value.
If you buy property from real estate agents or brokers, they are crucial in facilitating property transactions in the UAE. They charge a commission based on the property's value, which you can avoid by using the trick or directly agreeing with the party.
When buying property, you finance it with a mortgage, which pays an additional mortgage registration fee. In Dubai, this fee is typically 0.25% of the loan amount and is paid to the Dubai Land Department. Registering the mortgage ensures the lender's interest in the property is legally authorized.
The UAE elaborates on the 5% Value Added Tax (VAT) on most goods and services, which was applied from January 2018. This VAT does not generally apply to the sale of residential property; it is usually used for specific commercial and new properties that investors sell.
You might ask about service and maintenance fees and additional costs associated with owning property in the UAE. These service charges generally apply to purchasing apartments or properties within managed communities and maintaining and operating common areas such as elevators, pools, security, and landscaping.
A property valuation is necessary for mortgage approval and usually ranges between AED2 and AED500 + VAT. In Dubai, the property valuation fee range is AED 150 for calculation purposes, which you must check accordingly.
You will be asked to pay the capital gain tax, a favorable tax regime that benefits real estate investment in the country. So, if you purchase property in the UAE, you don't need to pay any taxes, but other service charges are applied, which you need to learn before purchasing any property in the UAE.
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