Dubai Property Registration Tax

Dubai Property Registration Tax

Dubai Property Registration Tax

At the start of 2015 developers started to send notification to all property owners in the Emirate, asking them to comply with the new Dubai Property Registration Tax rules before June 30th 2015. The new property registration fee now stands at 4% of property value, as opposed to 2% originally. The date was subsequently put back to October 31st 2015.

The Dubai Land Department (DLD) set the deadline for registration of all ‘sold’ units in the emirate by property owners. It stated that failure to pay the registration would result in penalties. To date these penalties have not been specified, although the DLD has strongly denied rumours that it intends to double the tax from 4% to 8% of the purchase price.

If you put a deposit on a property in Dubai you’ll probably have been made aware of the issue as developers were required to send notice of the deadline to all unit owners, asking them to comply with the new rules. There are those who will not have received the notices. If you did not purchase from a developer (i.e. if you were not the original purchaser of the property) or if you have changed your contact details you may not have received the notices.

The notification may have read similar to the following: “Further to the notification received from the Government of Dubai Land department dated 19/03/2015 concerning “Registration of Real Estate Actions and Rights in Property Registry & Interim Real estate Registration, Payment of fees to the Department” – we seek your urgent action to complete registration of your unit(s) with Dubai Land Department (DLD) before June 1, 2015.”

“As mandated by DLD all sold units require to be registered before June 30, 2015, and failure to comply, will attract action & penalties.”

Buyers in ‘off plan’ projects are required to pay the registration fee of 4% of the property price at the time of booking or within 30 days of purchase (the option depends on the developer). Buyers from 2002 (when real estate transactions became possible in Dubai) up to 2013 could defer the fee payment until time of resale or handover. Most foreign owners took this option on purchase because many of them never intended to take full ownership of the units, preferring to ‘flip’ them for a capital gain. The worldwide financial downturn of the late 2000’s changed these plans, so many overseas owners were stuck with properties they no longer wanted and, in many cases, on which they couldn’t afford to complete (if you wish to sell a property or a deposit on a property in Dubai, click here).

The Dubai Land Department (DLD) doubled the property registration fee, from 2% to 4% of the property value in October 2013. The new fee covers all property transactions in the emirate of Dubai except for the industrial sector, including warehouses. The registration fee increase was part of a range of measures introduced in 2013 to slow down a rapidly overheating property market. These measures appear to have been successful to date as Dubai property prices were down 15.5% in the first two quarters of 2015, having increased by over a third in 2014 alone (see our article on Dubai Property Prices here).

Developers were also asked to request that owners who have fulfilled their obligations, and are in possession of title deeds, are also required to send a scanned copy of title deed to the department to prove compliance.

The department declared that the following documents would be required to facilitate unit registration:

* Valid current passport copy

* Valid Emirates ID copy

* Non residents need to provide valid national ID copy

* Sale and purchase agreement of unit and parking particulars

* Copy of Power of Attorney and passport copy (if applicable)

* Company documents (valid trade license, passport copy)

* Original clearance letter from the facility management company

* In case of mortgaged units, bank/finance company offer letter addressed to DLD

* Applicable Fees: (subject to change as per DLD guidelines)

If you have a property in Dubai that you wish to sell, please do contact as we may be in a position to assist. We have contact with a number of end users, property investors and investment instutions in the emirate that are currently looking for properties. Send on as much information as you can on the property and we’ll look for an offer.

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