- Broker Directory
- My Tools
- News & Advice
- Market Trends
- Other GN Sites
- Do I have to pay tax on Dubai property income if I am a resident abroad?
Generally, people pay taxes in the country they live and/or work in. People living in one country and working in another should only pay taxes in one country so they don't get stung in both countries. Double taxation agreement means that if you are taxed in one country, you don't pay tax again on the same income in another country. The UAE has double tax agreements with many countries. Being declared a tax resident for a country means you pay taxes according to that country's laws on any and all income that includes income from investments (rentals), no matter where it is sourced from. Most states expect you to pay tax on assets abroad. In some jurisdictions, however, it is possible not to pay by ensuring that rental income or proceeds from the sale of a Dubai property remain offshore. An offshore deposit account allows you to deposit/transfer funds with privacy.
- What is an offshore company? Why open one? What do I get with my Dubai offshore company?
An offshore company is a business entity that is formulated in a tax jurisdiction for legally minimizing any type of tax payment and improving wealth management. Primarily, one would open an offshore company to gain confidentiality over their financial affairs and grow wealth without intrusion. Offshore companies can eliminate or minimize many types of tax payments.
In our opinion, a Dubai offshore company is an excellent corporate structure because it is tax-free; it portrays a good image to your clients and suppliers; there is no public register of shareholders and directors; is quick to incorporate. However, clients should note that it is not permitted to trade and rent local premises in the UAE. It must ideally submit audited financial statements annually to the Dubai government. Most free zones in Dubai give you an option to set up an offshore/onshore company.
- Does one have to be physically present in Dubai to buy a property here?
It is possible for the prospective buyer to give power of attorney to a trustworthy person to handle all the aspects of the purchase on his behalf. But it is advisable that he checks all the documentation and ensures that everything is clear before signing the deal. Whether the vendor is an individual or a development company, the buyer may choose to either pay cash or obtain mortgage finance to spread his payments over time; non-Emiratis are allowed to finance their home in Dubai over any period, up to 25 years. To satisfy this need, several specialist mortgage companies and local banks now offer loan packages. But before committing yourself, make sure that you have sufficient information from a broad cross-section of sources to help you make the right decision, e.g., do detailed due diligence online and consult a reputed RERA-registered agency.
- I want to sell my property in Dubai. My broker is pushing me to sign Form A. Should I?
Form A is a RERA-approved contract which sets out conditions for a relationship between a broker and a seller. You can sign it on an exclusive basis with one broker or non-exclusive basis with up to three brokers. Such contract can be terminated by either party by giving a seven-day notice. Signing Form A is highly recommended because it clearly specifies the obligations of either parties as well as provides a basis for accurate listing and pricing, allowing buyers to access real listings. Property portals these days are full of inaccurate pricing and fake listings because most owners are skeptical about signing the form and many agents are skeptical about pushing the owners, so there is no agreed price for sale in writing; hence; there is only verbal commitment to a price between sellers and agents which varies as per situation. Agents have to be firm on this subject and agencies should make a policy of willing to let go of the listing if Form A is not in place.
- Question of the Week: Are we entering another property bubble?
In case you are wondering if it is the right time to buy real estate in Dubai, the answer is yes.
A lot of people are comparing the recent times with the 2008 bubble. By all means, the Dubai real estate market is much more mature and it is surely not headed for another crash. The market is now well-regulated, with developers working under strict escrow laws and restrictions like not selling a project till 100% plot payment has been made.
Investors are now more intelligent and cautious, and the liquidity situation is much better globally compared to the previous times.
As a result, you do not witness panic sales. Moreover, the deals that you are getting recently have not crossed a bottom price barrier and no one is willing to sell the properties below a certain level of purchase price or below cost of construction like it happened in 2008 where areas like Jumeirah Lakes Towers and Business Bay were sold at Dh600 per square foot.
There are some amazing and huge infrastructure and real estate projects which have been announced and will be completed in the next four to five years. The much-talked-about Expo 2020 is still five years away, so grabbing good deals in a little shaky market is a good opportunity to buy and hold for reasonable gains.
However, you must be cautious in choosing the right developer, area and price.
Source: Sanket Khanna, Special to Freehold
The writer is CEO and Founder, SNS Properties
Send in your property issue-related questions to be answered by industry experts, mentioning 'Ask the Agent' in the subject line, to: firstname.lastname@example.org