Everyone with a roof over their head wants to know how the revised VAT law will impact property sales in the UAE. As the sale and purchase of newly constructed real estate is likely to be zero rated (that is, reported on a tax return but taxed at a zero per cent rate), investors in residential property will not be required to pay VAT to the developer or a subsequent seller.
The initial, first sale of new homes will be taxed at a rate of zero per cent. This means property developers will be able to claim back any VAT they had to pay from the government. Residential tenants’ leases will be exempt from VAT, but commercial tenants – those in offices, shops, etc – can expect to pay VAT at the standard rate of five per cent. Also, sales of commercial property will be subject to VAT at the standard rate of five per cent.
Meanwhile, residential deals, including rentals, will remain tax exempt, and therefore should not be affected. That’s good news for home-buyers. All residential housing, both for first-time buying and for buy-to-rent, will be subject to VAT at zero per cent.
Source Credit: Khaleej Times
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