According to a recent report on global property taxes by UK property firm Knight Frank and accounting giant EY, expatriates buying properties in Dubai pay one of the lowest taxes on their purchases when compared to 15 other cities around the world. Here’s what you need to know about Dubai property taxes:
- No Taxation on properties in Dubai
Dubai is a tax-free emirate, making it a popular destination for both investors and residents. Dubai does not need to rely on direct taxation for income because of its revenue from oil and trade. It avoids the property tax, however, by charging a monthly “housing fee” (also known as the municipality tax) as well as a 4% transfer fee.
All property owners must pay 5% of the average rental value in their area, as well as a fee to the Dubai Land Department when the property is transferred.
- Second lowest in the world
The report, which examined 15 cities around the world, discovered that Dubai had the second-lowest rate of property fees (which it compared to other property taxes, as Dubai does not have a property tax), equating to 3.6% over a five-year period, with only Monaco preceding it at 3.5%. The ranking comes despite the Dubai Land Department raising the transfer fee to 4% of the property’s value.
- Dubai one of the cheapest cities for property investment in the world
When comparing property tax rates in the world’s major cities, it is clear that Dubai is one of the most affordable cities in the world for property investments. In comparison to other cities such as Sao Paulo, where property taxes can reach 30% of the total value, Dubai is an appealing playground for investors, especially given that rental yields in some areas can reach 8%.