5 min read
Updated: 23 Oct 2025

Dubai Property Tax Explained: Rates, Regulations, and Benefits

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Key Takeaways:

Dubai has no annual property tax, making it one of the world’s most investor-friendly real estate markets
But, buyers pay one-time fees such as the 4% DLD transfer fee, as well as ongoing costs like service charges and housing fees
The city’s low-tax system supports higher rental yields, capital growth, and long-term investor appeal

For real estate investors worldwide, property taxes are often one of the most significant long-term costs to consider. In many global cities, annual property taxes can erode yields and impact the total return on investment.

In contrast, Dubai continues to attract both homebuyers and investors with its low-tax environment and business-friendly policies. There is no annual property tax on residential real estate, a significant incentive that distinguishes the emirate from many international markets.

That said, Dubai’s property tax system does include one-time fees and government charges that all buyers should be aware of before making a purchase. In this guide, we’ll explore how property taxation works in Dubai, break down the most relevant fees, clarify common myths, and highlight the tax benefits that continue to support Dubai’s real estate market growth.

Table of Content

Understanding the Property Tax System in Dubai
Property Tax Comparison: Dubai vs London
Property Tax Comparison: Dubai vs New York
Benefits of Dubai’s Property Tax System
Common Myths About Dubai Property Taxes
Rates & Fees for Property Owners in Dubai
Conclusion

Understanding the Property Tax System in Dubai

Yes, Dubai does not impose property tax on property owners - that is the system's foundation. However, costs such as registration fees and service charges could be considered a part of the property tax system in Dubai.

It is essential to familiarise yourself with these costs, whether you are referring to personal or commercial property tax in Dubai.

For example, a property transfer fee in Dubai costs 4% of the property value. Property owners and tenants are also required to pay an ongoing housing fee, of 5% of the average rental value of the property, which is paid as part of the DEWA bill.

Other costs which could be considered similar to property tax in Dubai include:

A security deposit is required for rental properties. This is typically 5% of the annual rent for unfurnished properties, or 10% if the property is furnished.
Home Insurance costs are an underrated aspect of property tax in Dubai, as many people forget about this. The cost of this varies, depending on the property type, size and area.
Property service charge is also known as maintenance fees. All property owners in Dubai must pay a predetermined monthly or annual maintenance fee to cover the upkeep of common areas in the community.
DEWA (Dubai Electricity and Water Authority) fees are for utilities. Every house owner must register for DEWA to set up their utilities.

Property Tax Comparison: Dubai vs London

When comparing property tax systems for residential real estate, Dubai presents a significantly more investor-friendly landscape than London. Here's how the two cities differ:

Category	Dubai	London
Annual Property Tax	None	Council Tax (varies by borough and property value)
Transfer Fee	4% DLD Transfer Fee	Stamp Duty – 5% for homes above £250,000 (12%+ for high-value or second homes)
Rental Income Tax	None (individuals)	Up to 45% depending on income and residency
Capital Gains Tax	None	18%–28%
Inheritance Tax	None	40% above £325,000 threshold (unless spousal exemption applies)

Property Tax Comparison: Dubai vs New York

New York’s tax structure is significantly more complex than Dubai’s streamlined system. Here's a side-by-side breakdown for residential real estate:

Category	Dubai	New York
Annual Property Tax	None	0.7% to 2.1% of assessed value
Transfer Fee	4% DLD Transfer Fee	1%–2.625% Transfer Tax, plus “Mansion Tax” on properties over $1M
Rental Income Tax	None (individuals)	Federal, state, and local tax – up to ~50% depending on income and deductions
Capital Gains Tax	None	Up to 37% depending on holding period, federal/state, and residency status
Inheritance Tax	None	Up to 40% estate tax on assets above exemption thresholds

Benefits of Dubai’s Property Tax System

What are some of the benefits you can reap as a property owner from the system of property tax in Dubai? Here is a brief list:

Because there is no property tax, owners have lower overall costs, especially compared to other countries. This allows a higher proportion of rental income to be retained as profit.
Alongside the lack of property tax in Dubai, transaction costs are usually low. Often, these costs are lower than in other major cities worldwide.
The Dubai real estate market is thriving, which can make it a great investment choice. Not only do you save money because of no property tax, but you can also earn high rental yields of 5-8%, which are very competitive.
Dubai doesn’t charge taxes on rental income or capital gains on property investments - which is another benefit for investors.

Common Myths About Dubai Property Taxes

One of the most common myths about property tax in Dubai is that it is high - when in fact, there is no personal income tax, capital gains tax or property tax on residential properties.

Another common myth is whether commercial property tax in Dubai is high. According to the city’s regulation, company profits may be subject to a corporation tax of 9%, and the sale of commercial properties will be subject to a 5% VAT.

People may also hear that while property tax in Dubai may not be there, the 'hidden charges' are high. While there are costs that have to be considered and budgeted for, they are generally very low by global standards.

Rates & Fees for Property Owners in Dubai

As a property owner, you must know all the fees you will likely pay in Dubai. Here are some of them:

Property transfer fee: 4% of the property sale price - the main Dubai Land Department fee
Mortgage registration fee (if applicable): 0.25% of the mortgage amount, plus AED 290
Municipality fee: Also known as the Dubai housing fee: 5% of the property’s annual rental value
Brokerage commission: 2% for residential sales and 5% for rentals
Value Added Tax (VAT): 5%
Ejari registration: AED 155 for the Dubai REST app (excluding VAT), AED 219.75 (inclusive of fees and VAT)

Conclusion

Dubai’s property tax system offers a unique advantage for investors and homeowners, with no direct property tax on residential properties and relatively low associated fees compared to global standards.

Understanding these costs, such as transfer fees, service charges, and housing fees, is essential for making informed decisions. With its thriving real estate market, high rental yields, and tax-free capital gains, Dubai remains an attractive destination for real estate investment.

Whether you want to understand the nuances of the tax system in Dubai or begin your journey as a potential homeowner or investor in the city, Engel & Völkers is here to facilitate your journey. With over 45 years of real estate expertise in the real estate sphere, Engel & Völkers is committed to helping you find your dream property in Dubai.

Get the answer to all your real estate queries with Engel & Völkers Dubai at +971 4 422 3500.

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