UAE CT applies to corporate entities earning rental income or property development profits at 9% above AED 375,000. Individual landlords earning personal rental income are excluded. Capital gains on property disposals by corporate entities are taxable — but gains on shares in property companies may qualify for the participation exemption. REITs are generally exempt. Records must be kept for 10 years (property specific).
Who pays UAE CT on real estate income?
The key distinction is between corporate entities and individuals. A UAE LLC, PSC, or free zone company that owns and rents out property pays UAE CT at 9% on rental income above AED 375,000. A developer that buys land, builds, and sells units pays CT on development profits.
By contrast, an individual (natural person) earning rental income from personally owned property — not through a company or trade licence — is excluded from UAE CT. This exclusion applies to personal investment portfolios: individual investors owning apartments or villas and collecting rent are not taxable.
The same apartment can generate taxable rental income (if owned by a UAE LLC) or non-taxable rental income (if owned by an individual personally). Many families that transferred properties into corporate names for asset protection now face UAE CT on the rental yield — a cost that did not previously exist.
Types of real estate income and CT treatment
| Income type | Taxable person | CT treatment |
|---|---|---|
| Rental income from commercial property | Corporate entity | Taxable at 9% (above AED 375K) |
| Rental income from residential property | Corporate entity | Taxable at 9% (above AED 375K) |
| Rental income from personal property | Individual (personal) | Excluded — not subject to CT |
| Property development profit (units sold) | Corporate developer | Taxable at 9% (above AED 375K) |
| Capital gain on property disposal by company | Corporate entity | Taxable at 9% (real property — not shares) |
| Capital gain on shares in property company | Corporate entity holding shares | Participation exemption may apply (≥5%, ≥12 months) |
| REIT distributions | Unit holders | Exempt if REIT qualifies as exempt investment fund |
Key deductions for real estate companies
- Depreciation — tax depreciation on investment properties is generally based on the useful life under IFRS. Note: land is not depreciable. For property held as inventory (developer stock), cost is deducted when the unit is sold.
- Finance costs — mortgage interest and loan costs are deductible subject to the 30% EBITDA cap (or AED 12M floor). For property developers with large project finance facilities, this cap requires monitoring.
- Maintenance and repairs — ordinary repairs and maintenance are deductible in the period incurred. Capital improvements (extending the property, adding a floor) are capitalised and depreciated over the asset’s useful life.
- Management fees and service charges — paid to property management companies are deductible if at arm’s length (related party rules apply).
- Zakat and ground rent — periodic payments to land authorities and Zakat paid by the business are deductible.
10-year record retention for real estate
UAE CT generally requires business records to be retained for 5 years. However, for businesses engaged in real estate activities, records must be kept for 10 years from the end of the relevant tax period.
This includes purchase contracts, title deeds, financing agreements, valuation reports, rent rolls, tenancy agreements, and all invoices for construction, maintenance, and management. The 10-year rule reflects FTA’s ability to audit long-lived asset transactions well after the year of purchase.
Property company or developer with UAE CT questions?
We advise on entity structure, CT treatment of rental and development income, deductibility of finance costs, and compliance for UAE real estate businesses.
Frequently asked questions
Do UAE real estate companies pay Corporate Tax?
Yes. UAE corporate entities (LLCs, PSCs, free zone companies) earning rental income or property development profits pay CT at 9% on income above AED 375,000. Individual landlords earning personal rental income are excluded.
Is personal rental income subject to UAE CT?
No. An individual earning rent from personally owned property — not through a corporate entity or trade licence — is excluded from UAE CT. This applies to residential and commercial property held personally.
Are capital gains on property disposals taxable in UAE?
Yes, for corporate entities. Gains on disposal of real property by a corporate entity are taxable at 9%. Gains on disposal of shares in a property company may qualify for the participation exemption (≥5% shareholding, ≥12 months).
How are property development profits taxed in UAE?
Profits from buying land, developing, and selling units are taxable at 9% above AED 375,000 for the corporate developer. Units held as developer stock are expensed when sold (cost of sales), not depreciated.
What is the record retention period for UAE real estate businesses?
10 years from the end of the relevant tax period — double the standard 5-year requirement. This includes purchase contracts, title deeds, financing documents, rent rolls, and all construction and maintenance invoices.
Are UAE REITs exempt from Corporate Tax?
Qualifying REITs and real estate investment funds that meet the UAE CT exemption conditions for investment funds are generally exempt. Unit holders pay CT on their share of REIT income only when they are corporate entities with REIT income above the AED 375,000 threshold.