In the last decade, Dubai has earned a reputation of being one of the prime destinations in the world for foreign investments in the real estate market. One of the many reasons behind this growth and emergence of the real estate sector in Dubai has been favorable property tax in the city. With its tax-free environment, the city attracts buyers globally looking to maximize their returns. Today Dubai is a thriving real estate market that provides lucrative investment without worrying about taxes.
No annual Property Tax
Unlike many other countries, where property owners are required to pay annual property tax, Dubai does not impose any property tax on residential properties. Upon purchasing a property, investors are not obligated to pay yearly taxes to retain ownership.
No Capital Gain Tax
Another significant benefit for foreign property owners is the absence of capital gains tax in Dubai. From purchasing a housing property like Damac Bay 2 by Cavalli or for personal use, investors will be able to sell it at a profit without worrying about any capital gains tax. Here the policy is a substantial incentive for investors looking for high returns.
No inheritance Tax
The country does not impose an inheritance tax, which means the property can be passed on to an heir without any additional tax burden. But make sure to have a will to ensure the assets get distributed according to your wishes.
Tax or Rental Income
While there is no property tax, the incomes derived from properties in Dubai are technically subject to taxes. However, there is no formal rental income tax that can be imposed by the country on investors or buyers of housing projects like Damac Bay 2 by Cavali. However corporate entities may be subjected to tax which depends on their legal structure.
Dubai Being tax-free for Foreigners
While several attributes contribute to foreign investment in the city, the primary attribute is having tax-free status for foreigners. UAE is tax-free for most forms of personal income, which includes salaries, dividends, capital gain, and rental income for individual investors. However, there are a few transactional costs that property buyers can consider.
- Property Registration Fee – This is a one-time fee of 4% fee of property value payable to the Dubai Land Department upon purchase.
- VAT on commercial properties – While residential properties are exempt, commercial properties in Dubai are subject to 5% Value Added Tax.
- Maintenance Fees – Property owners are required to pay the regular maintenance fee which covers the upkeep of shared facilities in residential buildings or communities.
Tax Benefits of Real Estate Investment in Dubai
Investing in the Dubai real estate market like Damac Bay2 By Cavalli has various advantages.
- High rental Yields – Dubai provides lucrative high rental yields compared to most of the other real estate markets globally with high returns that range from 5% to 9% per annum.
- Freehold ownership for foreigners – Expats can buy freehold properties in designated areas which means complete ownership rights with no restriction.
- Residency Visa through Property Investment – Investors purchasing a property worth over 750,000 AED or more are eligible to apply for a residency visa which can be extended for up to 10 years depending on the value of the investment.
Conclusion
One of the factors behind the surge in Dubai, ‘s economy has been the real estate market which has opened its doors for foreign investments. Aside from paying no tax, they also avail benefits of a golden Visa of UAE upon purchasing or investing in a luxury home like Damac Bay2 by Cavalli. This leads to a new wave of foreign investment in the real estate market of Dubai.