Mar 252015
 

Dubai Property Registration Tax

Dubai Property Registration Tax

If you paid a deposit for a property in Dubai back in the 2000’s, you’ll probably be aware that developers have started to send notification to all unit owners, asking them to comply with the new Dubai Property Registration Tax rules before June 30th 2015. The new property registration fee now stands at 4% of property value, as opposed to 2% originally.

The Dubai Land Department set a deadline of June 30th 2015 for registration of all ‘sold’ units in the emirate by property owners. It stated that failure to pay the registration would result in penalties. (*** Update – this deadline has been put back to October 31st 2015***)

If you put a deposit on a property in Dubai you’ll probably have been made aware of the issue as developers were required to send notice of the deadline to all unit owners, asking them to comply with the new rules prior to June 1st.

Your notification may have read similar to this: “Further to the notification received from the Government of Dubai Land department dated 19/03/2015 concerning “Registration of Real Estate Actions and Rights in Property Registry & Interim Real estate Registration, Payment of fees to the Department” – we seek your urgent action to complete registration of your unit(s) with Dubai Land Department (DLD) before June 1, 2015.”

“As mandated by DLD all sold units require to be registered before June 30, 2015, and failure to comply, will attract action & penalties.”

Buyers in ‘off plan’ projects have to pay the registration fee of 4% of the property price at the time of booking or within 30 days from purchase (the option depends on the developer). Buyers from 2002 (when real estate transactions became possible in Dubai) up to 2013 could defer the fee payment until time of resale or handover. Most foreign owners took this option on purchase because many of them never intended to take full ownership of the units, preferring to ‘flip’ them for a capital gain. That plan went out the window with the worldwide financial downturn of the late 2000’s, so many overseas owners were stuck with properties they no longer wanted and, in many cases, on which they couldn’t afford to complete (if you need to sell a property in Dubai, take a look at our post on the subject).

Unfortunately, in typical Dubai fashion, the exact penalties or action that will be taken by the land department had not been specified at time of publishing this article – even though the demands for registration fees have already been made.

The Dubai Land Department (DLD) doubled the property registration fee, from 2% to 4% of the property value, back in October 2013. The new fee covers all property transactions in the emirate of Dubai except for the industrial sector, including warehouses. The registration fee increase was part of a range of measures introduced in 2013 to slow down a property market which appeared to be overheating again. These measures have been successful to date as Dubai property prices were down 15.5% in the first two quarters of 2015, having increased by over a third in 2014 alone. You can find some more in depth information on Dubai Property Prices here.

Developers were also asked to request that owners who have fulfilled their obligations, and are in possession of title deeds, are also required to send a scanned copy of title deed to the department to prove compliance.

The department declared that the following documents would be required to facilitate unit registration:

* Valid current passport copy

* Valid Emirates ID copy

* Non residents need to provide valid national ID copy

* Sale and purchase agreement of unit and parking particulars

* Copy of Power of Attorney and passport copy (if applicable)

* Company documents (valid trade license, passport copy)

* Original clearance letter from the facility management company

* In case of mortgaged units, bank/finance company offer letter addressed to DLD

* Applicable Fees: (subject to change as per DLD guidelines)

If you have a property in Dubai that you wish to sell, please do contact info@diarmaidcondon.com as we may be in a position to assist. We have contact with a number of property investors in the emirate that are currently looking for product.

 

 

 

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