Tax Implications of Real Estate Investments in the UAE: Strategies for Property Developers

Navigate the complex world of UAE real estate investments with our expert tax strategies for property developers. Learn how to optimize your returns while staying compliant in the dynamic UAE property market.

UAE’s property market has been on an upward trend for years. has only accelerated in the first half of 2023. According to the UAE Land Department, the city witnessed a record-breaking 37,762 units sold, racking up residential property market transactions worth nearly 89 billion dirhams ($24.23 billion). Luxury properties showed an astounding 87% increase compared to the first quarter of 2022, with apartments accounting for 62% of all deals.

Why investors love the UAE 

  • Booming Economy: UAE’s economy is one of the fastest-growing in the world, thanks to its strategic location, business-friendly policies, and diverse industries. This growth translates to a stable and lucrative real estate investment market for investors.
  • Minimal Taxes: UAE is known for its favorable tax policies, with no income tax, capital gains tax, or property tax. These reasons make it an attractive destination for investors seeking high investment returns.
  • Global Hub: UAE is a global hub for business, tourism, and trade, making it an attractive destination for people who want to diversify their portfolios. Its strategic location between Europe, Asia, and Africa gives it a unique edge in terms of connectivity.
  • Quality of Life: UAE is known for its high standard of living, with world-class infrastructure, healthcare, and education systems. This makes it an attractive destination for people looking to relocate or invest in a second home.

 UAE Real Estate tax strategies?

 UAE real estate investment is a straightforward process. Here are the steps you need to follow:

Choose a reputable UAE real estate agency: 

Look for a corporation with a good track record of success, experience in the UAE market, and a reputation for excellence. Bookkeeping and accounting services in Dubai, with a team of experts who specialize in assisting international investors.

Determine your budget and investment goals: 

Before investing in UAE real estate, it’s essential to determine your budget and investment goals. This will help you narrow down your options and find the best investment opportunities.

Choose the right type of property: 

UAE offers a wide range of properties, including apartments, villas, townhouses, and off-plan properties. Choose the type of property that best suits your investment goals.

Conduct due diligence Before making a purchase. 

You need to conduct due diligence on the property and the developer to ensure that everything is above board and meets your investment criteria.

Can I Buy My Own Property in UAE from abroad?

Yes, you can buy your own property in UAE from abroad. As an international citizen, you can own freehold property in designated areas of UAE, such as UAE Marina, Jumeirah Lake Towers, and Business Bay. The process involves obtaining a residency visa and opening a bank account in the UAE.

UAE Villas, Townhouses, Off-Plan, Apartments, Hotel, etc. General Ideas for Starting Prices

UAE’s real estate market offers a wide range of options for investors, with prices varying depending on the type of property and its location. Here are some general ideas for starting prices:

  • Villas: Prices for villas in UAE start at around AED 1 million ($272,000) and can go up to AED 100 million ($27.2 million) or more for luxury properties.
  • Townhouses: Starting prices for townhouses in the UAE range from AED 800,000 ($218,000) to AED 10 million ($2.7 million) or more.
  • Apartments: Prices for apartments in UAE start at around AED 400,000 ($109,000) and can go up to AED 100 million ($27.2 million) or more for luxury properties.
  • Off-plan properties: Prices for off-plan properties in UAE start at around AED 500,000 ($136,000) and can go up to AED 10 million ($2.7 million) or more.

Bonus Tip for Investing in UAE

When investing in UAE real estate, it’s essential to consider the location of the property carefully. Properties in prime locations, such as UAE Marina, Downtown UAE, and Palm Jumeirah, tend to have higher rental yields and appreciation rates than properties in less desirable locations.

The introduction of corporate tax implications in the UAE is going to be a great effort from a policy perspective. Considering the organic growth of finance and business in the UAE, certain legacy codes suddenly appear tax-inefficient and might pose significant costs in the future.

The tax policy and clarifications by the government around such legacy practices need to be reviewed. One such is for business leaders to purchase real estate under their corporation’s name.

Separate legal personality of a corporation

It is fairly common in the UAE for business leaders to purchase real estate under their corporation’s name instead of their name. The practice helps consolidate assets, strengthen the corporation’s financial statements, and facilitate future borrowings, if any.

If one or more person de facto holds 100 percent ownership/control of a firm. Then the owner(s) and the firm are practically an extension of each other. However, under the Corporate tax Law, corporations on the mainland or in the free zones are considered as ‘juridical persons.

‘Juridical persons’ have a different legal personality distinct and independent from their owners/stakeholders. The juridical person has unique rights, obligations, and liabilities. This has been a well-known global principle since 1896 (Ref: Solomon vs. Solomon case).

The real estate held under the corporation’s name should be treated as that of the corporation and not of its owners. The implications would not alter whether it is a commercial property or a residential, if in the UAE or outside.

All business is taxable.

Business owners mostly consider only the principal activities of the corporation, such as manufacturing, trading, and services. This is all a must for reviewing the CT impact. It is incorrectly assumed that the corporation is not in the business of real estate just because it holds the property (of its own,r(s)). It is also assumed lease rentals, or profits from future disposal, will not be taxed as profits.

However, for the application of the Corporate Tax Law to corporations and other juridical persons. All activities done and assets used/held will be said to be activities conducted and assets used/held for the reasons of a ‘business.’ Moreover, activities done by a juridical person will be considered as ‘business activities’. Also, these will come within the scope of UAE Corporate Tax unless specifically exempted.

No apparent exemption is proposed under the Corporate Tax decree law for corporations earning income from real estate. It has been mentioned in the Frequently Asked Questions that businesses engaged in real estate control, construction, development, agency, and brokerage work. All of these industries will be subject to UAE Corporate Tax.

Accordingly, the income/profits from real estate held by corporations could be taxed in the future.

Tax implications on people with real estate exposure

Certain income earned by a guy in their personal capacity would not be taxable. Thus, profits, capital gains, and lots of income from owning shares or other bonds or stock. The income earned by an individual from investing in UAE property in their capacity. They will usually not be subject to Corporate Tax UAE. 

Is it too late for tax strategies?

As the income earned by a guy from real estate may not be taxed. For this reason, business owners might think about transferring the real estate investments in the corporation’s name. Thus not to their own before the Corporate Tax implementation. Would it be the right thing to do? Even though the Law will be in force from June 1. The ‘anti-abuse’ rules have presently in effect since the publication of the Corporate Tax decree law in the official gazette.

Under the ‘anti-abuse’ laws, a transaction or an arrangement is not for a valid business reason.

Tax policy and clarification

As corporate tax implication is new to the UAE landscape, business owners would require significant support and guidance on tax issues. A public clarification from the government on such legacy issues will immensely help.

Final Conclusion for UAE Property Developers:

UAE’s booming economy, minimal taxes, global hub status, and high quality of life make it an attractive destination for real estate investors. This includes international citizens. Investing in UAE real estate from anywhere is a straightforward process. You can do it with the help of a reputable real estate investment agency like Aeon &Trisl. By following the steps outlined above and conducting due diligence. International investors can find the best investment opportunities in the UAE’s real estate investment market. When choosing a property, carefully considering the location to maximize rental yields and appreciation rates is essential.

CTA: Ready to invest in UAE real estate? Contact today to learn more about investing in UAE’s property market and how they can assist you in buying your dream property.

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