Real estate VAT depends on property type. Residential is exempt, commercial is 5%, and the first supply of new residential builds is zero-rated. UAE Nationals can claim refunds on new home construction.
| Fact | Value | Source |
|---|---|---|
| Residential property supply | Exempt (first supply of new build: zero-rated) | FTA — Real Estate Guide VATGRE1 |
| Commercial property supply | 5% standard rated | FTA — Real Estate Guide |
| Bare land supply | Exempt | FTA — Real Estate Guide |
| UAE Nationals new home VAT refund | Available — specific conditions apply | FTA — UAE Nationals Refund Guide 2026 |
Real estate VAT depends on property type. Residential is exempt, commercial is 5%, and the first supply of new residential builds is zero-rated. UAE Nationals can claim refunds on new home construction.
The VAT treatment of property depends on what it is and how it is used. The first sale of a newly built residential property within three years of completion is zero-rated, so the developer charges 0% but still recovers input VAT.
Later sales and leases of residential property are exempt — no VAT is charged, and the landlord cannot recover input VAT on related costs.
Commercial property — offices, shops and warehouses — is standard-rated at 5% on both sale and lease.
Sales of bare land are exempt from VAT, while sales of developed or covered land can be standard-rated.
UAE nationals building a new home for their own use can reclaim the VAT incurred on construction, provided they apply within the required window and meet the FTA conditions.
Laws and regulations change. Always verify with the relevant authority before acting on this information.
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