Dubai investors pay lower property tax than London, Hong Kong

Dubai investors pay lower property tax than London, Hong Kong

Property tax in Dubai is one of the lowest in the world, cheaper than other popular investment markets including London, Paris, Hong Kong and Singapore.

  • Dubai’s property tax rate is the second lowest in the world at 3.6%
  • The property tax rate is highest in Sao Paolo, with Hong Kong coming in second
  • Transaction fees on property in Dubai remain at a static rate and are low in comparison to many other countries

Investors in Dubai real estate pay one of the lowest property tax rates in the world.

Dubai, where strong tenant demand for property leads to 7.8% yields, has a tax cost of 3.6% of the property price over a five-year period, a joint report by Ernst & Young (EY) and Knight Frank found.

Tax is an important factor when purchasing property because it is often the after-tax return that measures the success of an investment.

The level of tax and fees in Dubai remain relatively low and the authorities are not expected to raise them, after the Dubai Land Department doubled property transfer fees to 4% of the value of the property.

Carolyn Steppler, Private Client Tax Services Partner at EY, said: “At 4%, transaction fees in Dubai remain low compared to other markets from which a significant number of residential property buyers originate, including India, Pakistan and the UK – making it an attractive investment destination.”

Taxation varies significantly around the globe, with Sao Paulo registering the highest tax rate at both the £660,000 and £6.6 million level, costing investors 31.5% over a five-year period, followed by Hong Kong, at 22.4%. In a market where high property tax rates are common, Dubai’s low tax rate in comparison to other popular locations gives the emirate an attractive edge to investors.

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