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Yes, 5% Value Added Tax (VAT) is applicable when buying an off-plan property from a developer in Dubai. This VAT is charged on the first sale of a residential property, provided it is within three years of completion. VAT is typically included in the sales price and is paid directly to the developer, who remits it to the Federal Tax Authority (FTA).
The buyer is responsible for paying VAT, but it is collected by the developer and submitted to the Federal Tax Authority (FTA). This amount is usually reflected in the Sales Purchase Agreement (SPA) and is paid along with the property installments.
In most cases, no VAT applies to the purchase of resale (secondary market) residential properties in Dubai. However, 4% DLD transfer fees are still applicable. VAT applies only on new sales directly from developers within a specified timeframe.
VAT paid on residential property purchases is generally not refundable unless you’re a VAT-registered business involved in certain taxable activities. For residential investors, VAT is considered part of the cost of acquisition and cannot be claimed back.
VAT is calculated as 5% of the total purchase price:
Yes, VAT exemptions may apply under specific conditions: