In our article “Real Estate Supply VAT”, we learned about the different situations of real estate supply and the applicability of VAT in each case. Let us now answer the main frequently asked questions about the supply of real estate under the UAE VAT.
FAQ 1: What is the supply of real estate in the UAE?
Answer: The supply of real property can include the sale, lease or grant of rights of any real property.
Frequently Asked Question 2: Do residential properties in the UAE have to pay VAT?
Answer: In the first three years of construction, the first supply of new residential buildings will be zero. All future supplies will be exempted, even if they were made within the first three years after construction.
FAQ 3: Does commercial real estate in the UAE need to pay VAT?
Answer: All supply of commercial property must pay 5% value-added tax.
In our article “Real Estate Supply VAT”, we learned about the different situations of real estate supply and the applicability of VAT in each case. Now, let us answer the main frequently asked questions about the supply of real estate under the UAE VAT.
FAQ 1: What is the supply of real estate in the UAE?
Answer: The supply of real property can include the sale, lease or grant of rights of any real property.
Frequently Asked Question 2: Do residential properties in the UAE need to pay VAT?
Answer: In the first three years of construction, the first supply of new homes will be zero. Even if all future supplies are manufactured within the first three years after construction, they will be exempted.
FAQ 3: Does commercial real estate in the UAE need to pay VAT?
Answer: All supply of commercial property must pay 5% value-added tax.
FAQ 6: Do people who own real estate need to register for VAT?
Answer: If there are no other commercial activities, the homeowner does not need to register for VAT. If the owner engages in other businesses, it shall check whether its turnover exceeds the registered limit. You can learn about the threshold limits for registration in our VAT registration threshold calculation article.
If within the next 30 days, the value of the supply in the past 12 months exceeds AED 375,000, the owner of the non-residential building must register.
FAQ 7: Will VAT be charged to tenants of his/her properties rented in the UAE?
Answer: The rent of residential buildings is usually exempt from VAT. The rent of commercial buildings will be subject to a 5% value added tax.
FAQ 8: What are the VAT rates applicable to different types of real estate supply?
Answer: The following are the VAT treatments for different types of real estate supply:
1. Standard rated consumables (Taxable @ 5%)
Lease or sell commercial property
b. Parking lot and hotel
2. Zero consumables (0% can be levied)
a. Supply of housing for the first time within three years after completion
b. Provide charity-related buildings first
3. Inspection-free supplies
a. Housing supply
b. Bare land
Therefore, depending on the type of supply, the supply of real estate under UAE VAT is taxable. Those engaged in the real estate industry must understand the tax applicability of real estate supply.