Executive summary.
In Dubai, "property tax" is often used as shorthand for transaction fees and ongoing ownership charges. Buyers should primarily budget for: (i) Dubai Land Department registration/transfer fees (commonly referenced as "DLD fees"), (ii) mortgage registration where financing is used, (iii) municipality housing fee (commonly billed via DEWA), and (iv) building/community service charges. VAT may apply in specific cases—particularly certain commercial transactions.
1) What "property tax" means in Dubai
In many countries, "property tax" refers to an annual levy calculated against an assessed value. In Dubai, the cost profile is typically different. Buyers should distinguish between:
- One-time transaction and registration fees paid at purchase/transfer.
- Ongoing municipal and community charges incurred during ownership or occupancy.
- VAT rules that may apply depending on property type and transaction structure.
This guide is designed to support disciplined budgeting and due diligence. It is not legal or tax advice. For case-specific confirmation, consult qualified advisors and applicable government guidance.
2) One-time fees when purchasing (typical items)
Core government fees (commonly encountered)
- DLD registration/transfer fee: commonly set at 4% for standard transfers.
- Mortgage registration (if applicable): commonly 0.25% of the mortgage value, plus fixed processing items.
- Trustee / administrative charges: fixed fees that vary by channel and transaction type.
Market and transaction support costs
- Agency commission: commonly agreed contractually (confirm before paying any booking amount).
- Developer NOC: may be required in certain resale scenarios (confirm applicability and cost).
- Conveyancing/legal support: recommended to verify title, SPA terms, and transfer readiness.
Fee table (for budgeting and documentation)
| Cost item | How it is typically calculated | When it is usually paid | Buyer action |
|---|---|---|---|
| DLD registration / transfer fee | 4% × purchase price (standard transfers) | At transfer / registration | Confirm fee allocation in the SPA/MoU and obtain a written cost sheet. |
| Mortgage registration (if financing) | 0.25% × mortgage value + fixed items (varies by service channel) | During mortgage registration/transfer workflow | Request a full bank fee schedule and DLD itemization before commitment. |
| Trustee / admin items | Fixed fee(s) (often tiered by property value) | At transfer | Verify exact totals for your transfer channel (trustee office / e-services). |
| Agency commission (contractual) | Agreed percentage or fixed amount | As agreed in writing | Confirm in writing, including scope (viewings, negotiation, transfer support). |
| Developer NOC (if required) | Fixed amount (varies by developer/project) | Before transfer appointment | Confirm whether it is required, timing, and validity period. |
| Conveyancing/legal support | Fixed fee (service-based) | Before transfer; sometimes staged | Use for title verification, SPA review, and execution readiness. |
Best practice: request a consolidated "Cost Sheet" listing each line item, payer responsibility, and payment method, prior to signing.
3) Ongoing ownership costs (what to include in annual budgeting)
Municipality housing fee (commonly billed via DEWA)
Many residents observe a municipality housing fee on utility billing. It is commonly described as 5% of annual rental value, billed in monthly installments via DEWA. The methodology can differ depending on occupancy and the basis used for rental value.
Illustrative example.
If the annual rental value is AED 120,000, then 5% is AED 6,000 per year, which is approximately AED 500 per month.
Building/community service charges (project-specific)
Service charges fund building and community operations (e.g., maintenance, security, common areas, amenities). Rates vary materially by project and are therefore a key underwriting variable for both end-users and investors.
- Obtain the latest service charge statement and confirm whether any arrears exist.
- Confirm what is included (e.g., chiller, master community charges, sinking fund contributions).
- Verify through the official Service Charge Index where applicable.
Professional note
When assessing affordability or ROI, incorporate ongoing charges into your annual cost of ownership. A purchase that appears attractive on price alone may be materially affected by service charge levels and municipal billing.
4) VAT overview (residential vs commercial)
Residential property (general treatment)
- Supplies of residential properties are generally described as exempt from VAT.
- The first supply of residential buildings within 3 years of completion may be zero-rated, subject to applicable rules.
Treatment can vary depending on the nature of the supply (sale/lease) and whether the supply qualifies under the relevant provisions.
Commercial property (where VAT applies)
- Certain commercial property sales are subject to VAT at 5%.
- The Federal Tax Authority provides a payment workflow for commercial property buyers; the relevant payment is to be completed prior to initiating ownership transfer processes, as described in the guide.
If acquiring an office/retail/warehouse or similar asset, request a written VAT position from the seller/developer and confirm the operational steps needed for transfer.
Compliance reminder.
VAT analysis can be transaction-specific. Where VAT is relevant, confirm responsibilities, evidence, and timing (including any portal steps) prior to transfer day.
5) Illustrative budgeting examples (AED)
The examples below are simplified for budgeting. Actual totals depend on transaction channel, documentation, financing terms, and project-specific requirements.
Example A: Ready residential, cash purchase
- Purchase price: AED 2,000,000
- DLD registration/transfer fee (4%): AED 80,000
- Plus trustee/admin items, agency commission (if applicable), NOC (if required), and conveyancing/legal support
Example B: Ready residential with mortgage
- Purchase price: AED 2,000,000
- DLD registration/transfer fee (4%): AED 80,000
- Mortgage amount: AED 1,500,000
- Mortgage registration fee (0.25%): AED 3,750 (plus fixed items)
Example C: Annual ownership budgeting (occupancy/holding)
- Municipality housing fee: commonly 5% of annual rental value (billed monthly via DEWA)
- Service charges: project-specific (verify via statements and official index where applicable)
- Insurance and unit maintenance: case-specific
6) Where fees occur in the buying process (practical workflow)
- Pre-offer due diligence: confirm property status, seller authority, and historic service charges.
- Offer and SPA/MoU drafting: document who pays which fees, including any trustee/admin items and NOC.
- NOC (if required): schedule and confirm validity period.
- Financing (if applicable): confirm bank valuation, processing fees, and mortgage registration items.
- Transfer appointment: prepare required IDs and payment instruments.
- Registration/transfer: pay DLD and associated processing items as applicable to your channel.
- Post-transfer setup: utilities, occupancy documentation (if relevant), and confirmation of ongoing charges.
Transaction discipline.
Maintain a single, reconciled cost sheet. Confirm all fees and recipients before issuing any payments.
7) Due-diligence checklist (buyer-ready)
- Confirm the asset classification: residential vs commercial (VAT implications).
- Obtain the latest service charge statement and confirm arrears status.
- Document fee allocation in writing: DLD 4%, trustee/admin items, NOC, agency, conveyancing.
- If mortgaging: obtain bank fee schedule and confirm 0.25% mortgage registration (plus fixed items).
- Estimate municipality housing fee exposure: commonly 5% of annual rental value, billed via DEWA.
- For commercial assets: confirm whether VAT applies and the operational steps needed prior to transfer.
- Retain all receipts, confirmations, and reference numbers for audit trail and dispute prevention.
8) Frequently asked questions
Is Dubai "tax-free" for property buyers?
Dubai is widely described as having no annual ownership tax based on assessed value. Buyers should, however, budget for transaction fees (e.g., registration/transfer fees) and ongoing costs (municipal housing fee via DEWA and service charges).
Are service charges negotiable?
Service charges are typically project-defined and not negotiated per individual unit purchase. The buyer's practical control is (i) verifying the latest charge level, (ii) underwriting the annual amount, and (iii) selecting assets/projects accordingly.
Is there capital gains tax when selling property in Dubai?
For individuals, the UAE generally does not impose capital gains tax under its personal tax framework. Treatment for businesses may differ and should be confirmed with qualified advisors based on structure and activity.
What should I prepare before transfer day?
A reconciled cost sheet, required IDs, confirmed payment instruments, any NOC (if required), financing confirmations (if applicable), and—where relevant—evidence that VAT-related steps have been completed for the transaction.
9) Official references (for verification)
- Dubai Land Department (DLD)
- DLD Service Charge Index (RERA)
- Federal Tax Authority (FTA)
- UAE Ministry of Finance (VAT overview)
- FTA PDF: VAT Payment for Commercial Property Buyers
Disclaimer: This page is provided for general information and budgeting support. Fees and tax treatment can change and may differ by transaction structure. Confirm your specific case through official guidance and qualified professional advice.