As a property owner in Dubai, you’ll need to stay informed about various financial aspects that can impact your investment. One such aspect is real estate tax refunds, which offer potential benefits and opportunities for property owners.
Understanding Real Estate Tax in Dubai
Residential properties in the UAE are not subject to property tax. However, prospective buyers should take into account various other fees associated with property ownership. These may include registration fees, service charges, and maintenance fees. It is important to note that a transfer fee is applicable in the United Arab Emirates, with the specific ratio varying by Emirate. For example, in Dubai, the transfer fee stands at 4%. The buyer and the seller usually share this responsibility.
Tax Reimbursement for Real Estate in Dubai
Conditions for Refunds
The eligibility criteria for VAT refund claims for UAE Nationals constructing new residences in the UAE are pretty straightforward. The applicant must be a UAE national who is an individual and possesses verified supporting documents. The property in question must be newly built and intended exclusively for the applicant or the applicant’s family as a residence.
How to Claim Vat Refund in UAE
To claim a VAT refund for construction costs incurred on your newly built residence in the UAE as a UAE National, you are required to follow the steps outlined by the Federal Tax Authority (FTA). For your application, you will need to gather the necessary documents, which include:
- a copy of your Family Book;
- a copy of your Emirates ID;
- proof of occupancy (e.g., water or electricity delivery bill if applicable);
- your construction contract;
- a certificate of completion from the municipality;
- a copy of the letter or certificate issued by your bank (containing relevant details such as the account holder’s name, the bank’s name, and the IBAN);
- in case the bank account holder’s name differs from the applicant’s, you may need an additional declaration form stamped by the court;
- if required, a refund request with an expense certificate from the Emirates Development Bank (through an expedited procedure);
- additional documentation to support the date of occupancy of the building may be necessary;
- for specific refund types like “Housing program and personal fund,” a funder certificate may be required;
- if the “Date of property completion certificate” on the application form exceeds 12 months, you will need additional documents;
- lastly, include a copy of your building permit and a property site plan.
Once the FTA receives a fully completed request, the anticipated processing time for the application should be around 20 business days.
Calculation of Refunds
For a refund claim to be considered by the FTA, it must adhere to the following criteria:
- The expenses must be related to the construction of a newly built property that will be used exclusively as the residence of the applicant and/or their family.
- Services rendered by contractors, such as builders, architects, engineers, and other related services.
- Building materials, encompassing goods typically incorporated by builders in residential buildings or their respective sites.
Furniture, electrical appliances, landscaping (such as trees, grass, and plants), garden furniture, ornaments, sheds, swimming pools, and children’s play structures are not however included in this category.
Tourist Tax Refund Dubai
Visitors and tourists in the UAE also have the opportunity to receive a refund on the Value Added Tax (VAT) they paid on purchases made during their stay. The refund process is done through a comprehensive electronic system that seamlessly connects retailers participating in the “Tax Refund for Tourists Scheme Dubai” with all ports of entry and exit in the UAE.
Benefits of Dubai Property Tax Refund
There are several benefits associated with VAT refunds for UAE Nationals constructing new residences in the UAE.
By meeting the eligibility criteria and successfully claiming a VAT refund, UAE Nationals constructing new residences can experience significant financial relief. The refunded VAT reduces the overall construction costs, allowing individuals to save money or allocate it towards other aspects of their residential projects.
Obtaining a VAT refund on construction costs makes building a new residence more affordable for UAE Nationals. With the VAT amount returned, you can better manage your budget and potentially invest in higher-quality materials, additional amenities, or customized features for your home.
An Incentive for Home Ownership
The availability of VAT refunds serves as an incentive for UAE Nationals to pursue home ownership. By offering financial benefits tailored to citizens constructing their residences, the government encourages individuals to invest in real estate – thus strengthening the housing market and promoting long-term stability.
Customization and Personalization
With the VAT refund, you have more flexibility to customize and personalize your newly constructed residences. The additional financial resources allow for unique design elements, upgraded finishes, and innovative technologies, enabling individuals to create a home that reflects their tastes and preferences. The sky is the limit!
Stimulating Economic Growth
VAT refunds for construction projects contribute to the overall economic growth of the UAE. By incentivizing individuals to build new residences, the construction industry experiences increased activity, leading to job creation and the circulation of funds within the local economy. This, in turn, fosters a positive environment for businesses, suppliers, and service providers associated with the construction sector.
Eligibility for Dubai VAT refund claims for UAE Nationals constructing new residences offers several benefits. These advantages provide tangible support for UAE Nationals pursuing their dream of building a new home in the country. If you have any questions about the process or would prefer to go through it with the assistance of a professional, feel free to contact our team!