Al Suwaidi & Company
Can anyone (including foreigners) own and occupy real estate in your jurisdiction (including shares in property owning companies)? Are there any restrictions?
Yes. Foreigners can own and occupy real estate and can hold shares in property owning companies. However, in Dubai, foreign ownership is permitted in areas designated as freehold or in free zones. Foreigners (who do not live in the UAE) and expatriate residents may acquire freehold ownership rights over property without restriction, usufruct rights, or leasehold rights for up to 99 years.
With regard to shares; 51% of the shares of all companies in onshore must be held by UAE nationals or companies wholly-owned by UAE nationals, Foreigners can own 100% shares in free zone companies and offshore companies in UAE and can hold properties in free hold areas.
Are there restrictions on lending for the purchase of real estate by foreign companies? If so briefly give an outline?
Yes. This area is governed by regulations laid down by the UAE Central Bank. Under these regulations, a lender must be a bank, company or financial institution that is registered with the UAE Central Bank to provide property finance. Real estate cannot be mortgaged to any person or entity other than a bank licensed and operating in the UAE.
Buying
Please provide a short summary of the fees and costs (including tax) relating to buying real estate in your jurisdiction.
There are fees associated with registration (4% payable by the buyer), administration, transfer, sales progression (if applicable), No Objection Certificates, Refundable Security Deposits (if applicable), and broker/agency fees. the said fees are payable as agreed between the parties.
Value Added Tax (VAT) on the supply of goods and services in the UAE is at a standard rate of 5%. Real estate is considered a "good" under the law, and a supply of real estate in the UAE includes selling or leasing such real estate and the VAT is not applicable for residential units.
Owning
Are there taxes applicable to owning real estate and can the burden of the taxes be passed to someone else (e.g. a tenant or an occupier - not being the owner)?
No taxes applicable on the ownership, however the tenants of business premises must pay an annual trade licence renewal fee to the Dubai Department of Economic Development. The rate is 5% of the annual rent.
Real estate used for hospitality purposes (for example, hotels and serviced apartments) is subject to a 10% municipality tax collected by the Dubai Department of Tourism and Commerce Marketing.
However, municipal charges levied by the Dubai Municipality do not apply in free zones or designated areas where freehold title is sold.
Tax Breaks
Are there tax breaks or other incentives for foreigners to buy real estate in your jurisdiction? If so what are they?
There are currently no methods used to mitigate real estate tax liability.
However, with regard to Freehold Properties in specific freehold areas in Dubai;
1.The owner has full ownership and control over the property and does not require permission before making any renovations or minor changes.
2. Freehold property owners and their families are entitled to renewable UAE residence visas if the value of the property is above AED 1 million.
3. It can be inherited by the family as per UAE law if the owner passes away with or without a presence of a will.
4. The property can be sold or rented out at the owner’s own discretion.
How is the ownership of Real Estate evidenced in your jurisdiction?
Title to real estate must be registered in the Property Register and a title certificate evidences title. Information in the Property Register is absolute evidence of title.
Is it possible to keep the identity of owners of real estate confidential in your jurisdiction?
The Property Register is not open to the general public. However, the following parties can inspect the Property Register and obtain a certified copy of the documents:
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Interested parties (generally the owner of the land).
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Judicial authorities and experts appointed by them.
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Competent authorities.
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Law firms and other registry appointed by the Land Department