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Non-residents liable to pay taxes on income from real estate: New Tax Regime

Owning a home, an apartment, or a piece of commercial property is not subject to a yearly tax in UAE. Additionally, VAT (Value-Added Tax) is not levied on commercial property transfers. Owning property in the UAE, however, will result in additional costs in the form of fees and charges. It\’s important to note that some of them must be paid by both homeowners and renters.  A failure to comply with governmental requirements (even if it\’s an honest mistake) can result in significant fines, so it\’s important to stay up to date on UAE tax legislation. Cost of purchasing land and property in the UAE The following costs need to be taken into account when purchasing real estate in the UAE: In Dubai and Abu Dhabi, the Land Department (LD) one-time fee is equal to 4% of the property\’s worth. For land, administrative costs are AED 430 ($117), while for homes and apartments, they are AED 580 ($158). For properties valued at less than 500,000 AED, registration fees are AED 2000 ($544) + 5% VAT, while for properties valued at more than 500,000 AED, registration fees are AED 4000 ($1088) + 5% VAT. If you obtain a mortgage, these amounts will vary. In Dubai, mortgage registration costs are 0.25 percent of the total bank loan amount; in Abu Dhabi, they are 0.1 percent. When everything is done, you can ask your local LD for a Certificate of Owned Property. In Dubai, this will cost you AED 260 ($70), while in Abu Dhabi, it will cost you AED 1000 ($272). It takes this process about 3 business days. You should be ready to pay extra costs when purchasing real estate in the UAE and executing a Sale and Purchase Agreement, such as: Fees charged by the real estate agent equal to 2% of the final sales price of the property plus 5% VAT. The cost to issue a NOC (No Objection Certificate) is AED 1000 ($272). The certificate attests that the owner of the building has no objections to you purchasing the property. When purchasing real estate that is already in use, this sum is applicable. If the property you\’re purchasing is still being built, the project\’s real estate developer will charge you AED 5000 ($1361) for the NOC. UAE property maintenance fees There are mandatory property maintenance and upkeep fees that cover things like garbage collection, janitor work, lawn maintenance, ongoing and future renovations, as well as taking care of public areas like playgrounds, gyms, and swimming pools, despite the fact that there are no federal or municipal taxes on real estate in the UAE. Owners of homes incorporated into residential communities, as well as those who own apartments and other residential spaces, must pay an annual service fee that ranges from AED 3 to 30 ($0.82 to $8.2) per square foot of real estate. All property measures and associated costs in the UAE are computed in square feet (1 square foot equals 0.093 square meters), thus all UAE residents should get used to this. According to a clarification from the UAE Ministry of Finance, income from real estate and other immoveable property would be subject to a nine percent (9%) corporate tax for foreign businesses and other non-resident juridical persons. These annual service fees are calculated precisely by UAE real estate developers (i.e., building owners) using factors such property size, number of floors, equipment on-site, project infrastructure, and so on. Rental taxes in the UAE In the UAE, municipal governments impose taxes on rental properties that are the responsibility of the tenants. The rates of these taxes, which are based on annual rental costs, vary from one emirate to the next. All tenants in Dubai pay 5% of the annual rent, expats in Abu Dhabi pay 3%, and renters in Sharjah pay as little as 2%. In all emirates, tenants of commercial property pay taxes equal to 10% of their yearly rent. The monthly instalments for these UAE rental property taxes are added to utilities bills. Properties in the UAE, both residential and commercial Every residential property is connected to land ownership under UAE law. A tent, caravan, or trailer are not regarded as residential properties. Before any development on a property can begin, \”intended use\” is another consideration. Exclusion determines what qualifies as commercial property, therefore everything that doesn\’t fit into one of the following categories: The same UAE real estate taxes and fees that are levied on residential structures also apply to mixed-use environments (buildings that include residential spaces together with commercial, retail, or entertainment sectors). VAT on UAE Real Estate When it comes to paying VAT on real estate in the United Arab Emirates, everything initially seems straightforward. Residential property transactions are exempt from VAT, but commercial property transfers are subject to a 5% levy. For residential real estate, there are two different VAT statutes in the UAE: \”exempt from VAT\” and \”zero-rated.\” Registration as a UAE VAT payer is required in the following circumstances: You presently fall under ZERO RATED TAX regime If you belong to one of these categories. This implies that until the government changes your rate (which they may do if they so choose to), you are not required to pay UAE VAT on residential real estate. VAT on residential property is EXEMPTED for everyone else in the UAE. VAT refunds on real estate in the UAE The UAE government promotes real estate development; people and businesses can buy a plot of land, build residential property on it, and then ask for a VAT refund on the costs of construction materials and other related costs. A Building Completion Certificate must be obtained from the local development authority and submitted to the FTA no later than six months after it has been issued in order to accomplish that. In addition, the VAT rate is 0% for the first three years following the completion of an apartment or house\’s construction on initial sales and rentals. Developers in the UAE are able to do this …

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