UAE Real Estate Tax Guide 2026: VAT, CT, and Stamp Duty for Property
UAE real estate tax guide 2026: VAT on commercial vs residential property, first supply vs subsequent supply, off-plan VAT, DLD transfer fee (4%).
UAE real estate VAT treatment
| Supply type | VAT treatment | Input VAT recovery? |
|---|---|---|
| First supply of commercial property | 5% standard rate | Yes — on costs relating to this supply |
| Subsequent supply of commercial property | Exempt — no VAT | No — input VAT on subsequent supply is blocked |
| Commercial property rental | 5% VAT | Yes |
| Residential property (first supply within 3 yrs) | Zero-rated | Yes — zero-rated is not exempt |
| Residential property (subsequent supply) | Exempt | No |
| Residential property rental | Exempt | No |
| Off-plan property sales (developer) | 5% on each payment instalment | Yes |
| Bare land sale/purchase | Exempt | No |
UAE property developer VAT and CT
- Off-plan sales: VAT is triggered on each payment instalment from the buyer — not when the unit is legally transferred. Developers must issue tax invoices for each instalment and account for VAT in the VAT return for the period of receipt.
- Developer trust accounts: In Dubai, developer sales are collected into RERA-regulated trust accounts. VAT collected on instalments is held in trust along with the principal — the developer must ensure the VAT is remitted to the FTA from the trust account on time.
- Mixed-use development: A development with commercial and residential units requires partial input VAT recovery — costs attributable only to commercial (taxable) are fully recoverable; costs for residential (exempt) are not; common costs (land, foundation, common areas) are apportioned using the standard method.
- CT: UAE real estate developers are fully taxable at 9% on profits above AED 375,000. Key CT issues: timing of revenue recognition (percentage of completion), deductibility of land acquisition costs (capital vs deductible), and intercompany financing of development costs.
DLD transfer fee and VAT
The Dubai Land Department (DLD) transfer fee is 4% of the property value — paid by the buyer (or split between buyer and seller by agreement). It is a government fee, not VAT — so:
- DLD fee is not subject to VAT: The fee is a government charge. No VAT is added to the DLD fee.
- DLD fee is not recoverable as input VAT: Because it is not VAT, there is no input VAT to recover.
- CT deductibility: The DLD fee paid by the buyer is capitalised as part of the cost of the property — it increases the cost base and reduces future capital gains on disposal.
UAE real estate company with VAT compliance questions?
We advise on VAT treatment of property supplies, partial exemption calculations, and off-plan developer returns. Fixed fee.
See VAT servicesFrequently asked questions
Is buying a property in UAE subject to VAT?
It depends. Purchasing commercial property from the first supplier (the original developer or from the entity that converted the property into commercial use) is subject to 5% VAT. Subsequent purchases of commercial property from a non-first supplier are VAT exempt. Residential properties within 3 years of completion: zero-rated (no VAT charged but seller recovers input VAT). Residential beyond 3 years, and all bare land: exempt. The DLD 4% transfer fee applies to all UAE property transfers.
Can UAE businesses recover VAT on commercial property purchases?
Only on taxable supplies (standard or zero-rated). If you are a fully VAT-registered commercial entity (e.g., an office for your own business), buying commercial property in a first supply: yes, you can recover the 5% VAT paid on purchase — if you use the property for taxable business activities. If the purchase is exempt (subsequent supply), no input VAT to recover.
How do UAE landlords account for VAT on commercial rent?
Commercial rents are subject to 5% VAT — the landlord must be VAT registered (if above AED 375K turnover) and must issue a tax invoice for each rent period. The VAT collected is included in the quarterly VAT return. VAT on costs related to the commercial property (maintenance, fit-out, management fees) is recoverable as input VAT.
How is UAE real estate treated for Corporate Tax?
Real estate companies (developers, holding companies, REITs) are subject to UAE CT at 9% on taxable income above AED 375K. Key positions: (1) gains on property disposal may benefit from participation exemption if held through a subsidiary (holding the property as shares, not directly); (2) rental income from UAE property held directly in a UAE entity is taxable; (3) REIT income may have different CT treatment — seek specific advice.
Official UAE Government Sources