Is There Property Tax in Dubai?
Written by: Marcus M. Araz, MBA, PhD · Updated:
No. There is no annual property tax in Dubai. For an individual buyer there is also no income tax on rent, no capital gains tax on a sale and no inheritance tax. The one large item you meet is the 4% transfer fee paid once at purchase; on the annual side there is no tax, only the service charge.
Tax, fee or service charge
Three words get mixed up and they are easy to tell apart: a fee is paid once to the state for a transaction, a tax is taken regularly on income or on ownership, and a Service charge is paid to the building's management. In Dubai the middle column is empty.
| Item | When it is paid | Amount |
|---|---|---|
| DLD transfer fee | Once, at purchase | Fiyatın %4’ü artı sabit kayıt ücreti |
| Annual property tax | None | None |
| Income tax on rental income | None | None |
| Capital gains tax | None | None |
| Inheritance tax | None | None |
| Service charge | Once a year | Per square metre, varies by project |
| Municipality housing fee | Monthly, on the DEWA bill | Yıllık kiranın %5’i, kiracı öder |
Your rental income is not taxed in the UAE
The United Arab Emirates does not levy income tax on individuals. Your Dubai apartment's rental income is therefore not taxable on the UAE side. What creates the gap between gross and net rent is not tax but the management fee, the service charge and vacant periods.
Does corporate tax cover me
The 9% corporate tax that came into force in 2023 was the heading that worried investors most. The rule is clear: a natural person's real estate investment in the UAE, as long as it is an activity that does not require a licence, is outside the scope of corporate tax whatever the amount. Cabinet Decision 49/2023 states this expressly, and the Federal Tax Authority's guide on real estate investment by natural persons takes the same line.
The AED 1,000,000 turnover threshold in the same decision applies to a natural person's other business activities; it does not operate for property rental. If you buy through a licensed company the picture changes, which is why the structure is worth discussing before it is set up.
Where VAT appears
The standard VAT rate in the UAE is 5%, but on the residential side you barely feel it. Residential rent is exempt from VAT, the first sale of a new home after completion is zero rated and later sales are exempt. On commercial property both sale and lease carry 5%. The projects in our portfolio are residential, so no VAT is added to the purchase price.
The service charge is not a tax, but it belongs in the budget
The annual cost item is called the service charge. It is set per square metre, varies with the project and its facilities, is supervised through RERA's Mollak system and its budget is published. In a tower with a pool, a gym and a concierge the charge is markedly higher than in a plain building. When you work out the yield, this item has to come off the gross rent.
Who pays the municipality housing fee
The Dubai Municipality housing fee is 5% of the annual rent and, as the government portal states, it is collected from the tenant and it is added to the DEWA bill in twelve instalments. For an investor letting the apartment out it is not a cost item.
Do not forget the Turkish side
The absence of tax in Dubai does not remove your declaration obligation in Türkiye. If you are a full taxpayer in Türkiye you declare your worldwide income, and rental income from Dubai is part of it. There is a double taxation treaty between Türkiye and the UAE; clarify with your accountant which income is taxed where and what credit is available.
Frequently asked questions
Is there an annual property tax in Dubai? No. There is no annual ownership tax levied on an individual in the UAE.
Do I pay tax on my rental income? Not on the UAE side. If you are a full taxpayer in Türkiye your declaration obligation continues.
Is there capital gains tax when I sell? Not for an individual seller. On a sale only the Land Department's transaction fees arise.
Does corporate tax concern me? A natural person's real estate investment is out of scope as long as it does not require a licence. Cabinet Decision 49/2023 says so expressly.
Do I pay VAT on the purchase? Not on residential property. On commercial property both sale and lease carry 5%.
How much is the service charge? It varies per square metre by project. At offer stage we share the actual figure for the project you are interested in.
Who pays the municipality housing fee? The tenant. 5% of the annual rent is added to the DEWA bill.
Sources
For the position of individuals the government portal's u.ae taxation page, for the scope of corporate tax Cabinet Decision 49/2023 and the Federal Tax Authority guide, for VAT the Ministry of Finance VAT page, and for the municipality housing fee the u.ae leasing page were relied on. The transfer fee comes from the Dubai Land Department tariff. Legislation can change; before any purchase decision we confirm the current position together.
Legal notice
capital.works® (YATIRIM UK LIMITED) is a real estate advisory company; it does not provide tax advice. This page is for general information and is not personal tax advice. Confirm your obligations on the Turkish and the UAE side with a qualified accountant.
The next step
If you want to see what the service charge is on a particular project and how it changes the net yield, Contact us. For an item by item breakdown of the purchase costs see our Cost of buying a home in Dubai page, and for the residency side our Residency in Dubai by buying property page.
We set out which right you buy with, and in which areas, on our Can I buy property in Dubai as a foreigner page.