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Like anywhere else in the world, Dubai offers different forms of property ownership, and there are a few to choose from.
When looking to buy a property, it is important to know what the different forms of ownership are and what best suits your needs.
It is important to note that freehold property in Dubai can be registered in the name of a foreigner, resident or national of the country.
This form of property is the most common and popular way of owning property in the emirate. This is done by registering the property at the Dubai Land Department under an individual's name.
There are many advantages of individual ownership. And it is a rather simple and straightforward process to purchase or sell property.
Individuals also have an option to assign a power of attorney to a representative, making this process even simpler.
This method of ownership is considered the most favorable for most buyers – those buying property for short-term gain or long-term investment – as it enables investors to get in and out of an investment in a speedy manner.
However, on the downside of buying as an individual, inheritance might become a tedious process as it will always be marred with uncertainties, which means the future of your purchase might lie in the hands of the Dubai Courts who will decide on succession.
It is, therefore, important to look into establishing a legal will in case of individual ownership as this safeguards you and your family in case of any unforeseen circumstances.
For other nationalities, they might face problems with taxes.
This form of ownership has also become a very common one.
It works well for married couples, family members or even business associates.
On the plus side, this process is as simple and easy as individual ownership except that there are two or more people involved instead of one.
On the downside, the problems and uncertainties around inheritance are again often a question.
Many expatriates should note that, unlike in many Western countries where property is passed on automatically to the surviving spouse, in the emirate, the deceased's ownership of property is transferred to his or her heirs and not the spouse or the joint owner.
Again, establishing a will remains an important issue in this kind of ownership. There might also be issues with regard to taxes.
Jebel Ali Free Zone (Jafza) offshore company
The advantages of registering a property under the name of a Jafza offshore company are plenty. The process is also easy and quick.
The offshore company can be owned by an offshore party which gives buyers more advantages.
These include exemption from local inheritance laws as the offshore company is subject to the laws of the offshore jurisdiction. Additionally, this method enables the owner to transfer his or her shares into a trust or a foundation.
On the downside, as with most company start-ups, there are time and costs associated with this. Yearly renewal and other fees can add up to the cost of property ownership.
Inheritance laws are not always applicable to properties owned by an offshore company.
Again, establishing a legal will might be a good idea to avoid any unnecessary hassles in the future.
There are many options to choose from, and the one that's right for you will depend on several factors.
Source: Ahid Shaikh, Special to Freehold
The writer is Director - Dejavu Real Estate