Foreigners Buying in Dubai Islands: What Taxes Still Apply in 2025?

Imagine stepping onto the balcony of your sleek Dubai Islands apartment, the Arabian Gulf stretching out before you, knowing your investment thrives in a tax-friendly paradise. For foreigners eyeing Dubai Islands in 2025 a 17-square-kilometer waterfront haven by Nakheel, with five interconnected isles (Central, Shore, Golf, Marina, and Elite) the allure is undeniable.

With 100% freehold ownership, a dirham pegged to the U.S. dollar for stability, and residential purchases free of 5% VAT, these islands draw 58% of buyers from countries like the UK, India, and Russia, fueling 94,000 property transactions in the first half of 2025. Offering 4-6% rental yields and 8-12% price appreciation, they outshine London (2-4%) or New York (3-4%). Properties over $545,000 qualify for a 10-year Golden Visa, while smaller units offer 2-year residency perks.

While individuals enjoy no personal income tax, capital gains tax, or annual property taxes, foreigners must navigate transfer fees, VAT on certain transactions, and corporate taxes if buying through a company. This guide explores taxes for foreigners in projects like Haven Living, Beach Walk Residences, Azura Residences, Cotier House, and Villa del DIVOS, helping you invest wisely.

Dubai Islands: A Tax-Light Magnet for Foreigners

Located 15 minutes from Deira via water taxi or Sheikh Zayed Road, Dubai Islands offer 50 kilometers of coastline, lush parks, and 80 resorts for 30,000 residents. With 2-3% vacancy rates versus 7-10% globally, demand is driven by 25 million tourists and a 5% population surge. Foreigners keep 100% of rental income ($48,000-$120,000 annually on a $1.2 million-$2 million property), versus $26,400-$72,000 elsewhere after taxes.

Zero capital gains tax saves $60,000-$140,000 on a $300,000-$500,000 profit, and no annual property taxes save $12,000-$40,000 yearly, unlike New York (1-2%) or London (council tax up to 2%). Residential purchases avoid 5% VAT ($60,000-$100,000), but transfer fees, VAT on developer fees, and corporate taxes can apply. These benefits make Dubai Islands a haven for foreigners seeking tax-smart investments.

The tax-light vibe feels like a warm welcome to your new home.

Transfer Fees: The Primary Tax Cost

Foreigners face transfer fees when buying, primarily the 4% Dubai Land Department (DLD) fee, split between buyer and seller unless negotiated. For a $1.2 million Haven Living apartment, this is $48,000; for a $2 million Azura Residences unit, it’s $80,000. Broker fees, typically 2% ($24,000-$40,000), cover agent services. Title deed issuance ($136-$272) and developer fees for off-plan properties (up to $2,722) add up.

Mortgage registration (0.25% of the loan, or $3,000 for a $1.2 million loan) and valuation fees ($680-$1,360) apply for financed deals. Gift transfers to family or shareholders reduce DLD to 0.125% ($1,500-$2,500), saving $46,500-$77,500. Compared to London’s stamp duty (up to 12%, or $144,000 on $1.2 million), these fees are modest but often catch foreigners off guard.

Transfer fees feel like a small hurdle toward owning paradise.

VAT on Developer Fees: A Hidden Cost

While residential purchases are VAT-exempt, saving $60,000-$100,000 on a $1.2 million-$2 million property, off-plan purchases often incur 5% VAT on developer fees ($20,000-$80,000). For a $2 million Beach Walk Residences apartment, this could mean $40,000 in VAT. Foreigners can recover this via Federal Tax Authority (FTA) registration ($500-$1,000), but many overlook this step.

Short-term rental operators must register for VAT if revenue exceeds $102,041, charging 5% but claiming credits on expenses like DTCM fees ($408-$816). A $2 million property yielding $80,000-$120,000 incurs $4,000-$6,000 in VAT but allows $1,000-$3,000 in credits. Non-compliance risks fines up to $13,612, a surprise for foreigners new to UAE tax rules.

VAT costs feel like a sneaky snag for unprepared buyers.

No Personal Income Tax: A Major Relief

Foreigners enjoy no personal income tax, a huge win compared to the U.S. (up to 37%) or UK (up to 45%). A $1.2 million Cotier House apartment yielding $48,000-$72,000 annually keeps every dirham, versus $26,400-$43,200 elsewhere, saving $21,600-$28,800. A $2 million Villa del DIVOS penthouse yielding $80,000-$120,000 saves $36,000-$48,000. Long-term leases require Ejari registration ($54-$136 annually), while short-term rentals, boosted by 25 million tourists, need DTCM registration ($408-$816), increasing yields by 10-20% ($4,800-$24,000). This tax-free income draws foreigners, but registration costs must be budgeted.

Tax-free rentals feel like a monthly gift to your wallet.

Zero Capital Gains Tax: Keep Your Profits

Dubai’s zero capital gains tax lets foreigners keep 100% of sale profits. Selling a $1.2 million Haven Living apartment for $1.5 million after 25% appreciation yields a $300,000 tax-free profit, saving $60,000-$84,000 compared to London (20-28%) or New York (20-37%). A $2 million Azura Residences unit sold for $2.5 million yields a $500,000 tax-free gain, saving $100,000-$140,000. With 8-12% price growth and 2-3% vacancy rates, this benefit fuels demand, but foreigners must account for transfer fees on resale.

Keeping every dirham feels like a financial high-five.

No Annual Property Taxes: Ongoing Savings

Unlike markets where annual property taxes cost $12,000-$40,000 on a $1.2 million-$2 million property, Dubai imposes none, a major draw for foreigners. Maintenance fees ($5,000-$14,000) and a 5% municipality fee on rentals ($2,400-$6,000) are the main ongoing costs, far lower than New York’s 1-2% or London’s council tax. Foreigners often overlook these fees when budgeting for long-term ownership, especially in luxury projects like Villa del DIVOS.

No property taxes feel like a weight lifted from your investment.

Corporate Tax: A Trap for Foreign Businesses

Foreigners buying through companies face the 9% corporate tax unless exempt. A company leasing a $2 million property yielding $80,000-$120,000 faces a 9% tax ($7,200-$10,800), reducing net income to $72,800-$109,200. Qualified Free Zone Person (QFZP) status in areas like Dubai Multi Commodities Centre (DMCC) avoids this, saving $12,240-$30,600, with setup costs of $2,000-$5,000. Small business relief waives corporate tax for revenues under $816,000 until December 31, 2026. Individual ownership avoids this tax, but foreigners with businesses must plan carefully.

Corporate taxes feel like a hidden hurdle for business-minded foreigners.

New Tax Rule 1: Domestic Minimum Top-up Tax (DMTT)

Effective January 1, 2025, the DMTT imposes a 15% tax on multinational enterprises (MNEs) with global revenues over €750 million ($793 million). A corporate entity leasing 10 properties with $1 million in income faces a 15% tax ($150,000), reducing net income to $850,000. Individual foreigners and smaller entities with revenues below $816,000 are unaffected, and QFZP status avoids DMTT, saving $12,240-$61,200 on $122,400-$612,000 in income. This rule targets large corporations, but foreigners with international businesses must ensure compliance.

The DMTT feels like a corporate tweak, sparing most foreigners.

New Tax Rule 2: Qualifying Investment Fund (QIF) Updates

Cabinet Decision No. 34 of 2025, effective Q2 2025, refines QIF and Real Estate Investment Trust (REIT) rules. QIFs remain exempt from corporate tax if real estate income is below 10% of total income and ownership is diversified. If a QIF earns $1 million, with $200,000 from real estate, 80% ($160,000) faces 9% tax ($14,400). Restructuring costs $1,500-$4,000. Individual foreigners avoid these rules, but those investing through funds must ensure compliance to minimize taxes.

QIF updates feel like a challenge for fund-focused foreigners.

Haven Living: Affordable Tax-Smart Choice

Haven Living by Metac Properties, set for completion in Q4 2025, offers 1-3 bedroom apartments ($475,750-$1.2 million) with 4-6% rental yields and 8-12% price growth. A $1.2 million apartment yields $48,000-$72,000 tax-free, saving $21,600-$28,800. Selling for $1.5 million yields a $300,000 tax-free profit, saving $60,000-$84,000. No property taxes save $12,000-$24,000 yearly, and VAT exemption saves $60,000. Transfer costs include a 4% DLD fee ($48,000), 2% broker fee ($24,000), and title deed issuance ($136-$272). Gift transfers save $46,500. Maintenance fees are $5,000-$10,000, with a 5% municipality fee ($2,400-$3,600). QFZP saves $12,240-$18,360. Golden Visa eligibility applies.

The waterfront charm feels like a tax-smart haven.

Beach Walk Residences: Coastal Tax Efficiency

Beach Walk Residences by Imtiaz Developments, set for handover in Q2 2026, offers 1-3 bedroom apartments ($598,095-$1.2 million) with 4-6% rental yields and 8-12% price growth. A $1.2 million apartment yields $48,000-$72,000 tax-free, saving $21,600-$28,800. Selling for $1.5 million yields a $300,000 tax-free profit. No property taxes save $12,000-$24,000 yearly, and VAT exemption saves $60,000. Transfer costs include a 4% DLD fee ($48,000), 2% broker fee ($24,000), and title deed issuance ($136-$272). Gift transfers save $46,500. Maintenance fees are $6,000-$12,000, with a 5% municipality fee ($2,400-$3,600). QFZP saves $12,240-$18,360. Golden Visa eligibility applies.

The beachfront vibe feels like a cost-smart retreat.

Azura Residences: Modern Tax-Free Gem

Azura Residences by Invest Group Overseas, set for completion in Q2 2026, offers 1-4 bedroom apartments ($680,625-$2 million) with 4-6% rental yields and 8-12% price growth. A $2 million apartment yields $80,000-$120,000 tax-free, saving $36,000-$48,000. Selling for $2.5 million yields a $500,000 tax-free profit, saving $100,000-$140,000. No property taxes save $20,000-$40,000 yearly, and VAT exemption saves $100,000. Transfer costs include a 4% DLD fee ($80,000), 2% broker fee ($40,000), and title deed issuance ($136-$272). Gift transfers save $77,500. Maintenance fees are $6,000-$12,000, with a 5% municipality fee ($4,000-$6,000). QFZP saves $20,400-$30,600. Golden Visa eligibility applies.

The urban waterfront feels like a modern tax-free oasis.

Cotier House: Serene Tax-Smart Retreat

Cotier House by Imtiaz Developments, set for handover in Q1 2027, offers 1-3 bedroom apartments and townhouses ($653,250-$1.2 million) with 4-6% rental yields and 8-12% price growth. A $1.2 million apartment yields $48,000-$72,000 tax-free, saving $21,600-$28,800.

Selling for $1.5 million yields a $300,000 tax-free profit. No property taxes save $12,000-$24,000 yearly, and VAT exemption saves $60,000. Transfer costs include a 4% DLD fee ($48,000), 2% broker fee ($24,000), and title deed issuance ($136-$272). Gift transfers save $46,500. Maintenance fees are $6,000-$12,000, with a 5% municipality fee ($2,400-$3,600). QFZP saves $12,240-$18,360. Golden Visa eligibility applies.

The serene sea views feel like a tranquil tax haven.

Villa del DIVOS: Luxury Tax-Free Escape

Villa del DIVOS by Mr Eight Development, set for completion in Q2 2026, offers 2-4 bedroom apartments and penthouses ($625,875-$2 million) with 4-6% rental yields and 8-12% price growth. A $2 million penthouse yields $80,000-$120,000 tax-free, saving $36,000-$48,000. Selling for $2.5 million yields a $500,000 tax-free profit. No property taxes save $20,000-$40,000 yearly, and VAT exemption saves $100,000. Transfer costs include a 4% DLD fee ($80,000), 2% broker fee ($40,000), and title deed issuance ($136-$272). Gift transfers save $77,500. Maintenance fees are $7,000-$14,000, with a 5% municipality fee ($4,000-$6,000). QFZP saves $20,400-$30,600. Golden Visa eligibility applies.

The luxurious retreat feels like a prestigious tax-free gem.

Strategies to Minimize Taxes

For foreigners: First, hold properties personally to avoid corporate taxes. Second, negotiate DLD fee splits, saving $24,000-$40,000 on a $1.2 million-$2 million property. Third, use gift transfers to reduce DLD to 0.125%, saving $46,500-$77,500. Fourth, recover 5% VAT on developer fees via FTA registration. Fifth, use double taxation treaties with 130+ countries to avoid foreign taxes. Sixth, U.S. investors deduct depreciation ($21,818-$72,727) and management fees ($2,400-$8,182), saving up to $24,545. For corporates, obtain QFZP status to avoid 9% tax and DMTT. Hire a property manager ($5,000-$14,000 annually) and legal/tax advisors to avoid fines up to $136,125.

These strategies feel like a shield against tax surprises.

Ongoing Costs to Budget For

Post-purchase, maintenance fees ($5,000-$14,000) and a 5% municipality fee on rentals ($2,400-$6,000) apply. No annual property taxes save $12,000-$40,000 yearly. Short-term rentals boost yields by 10-20%, adding $4,800-$24,000, but require DTCM registration. These costs, lower than London’s council tax ($24,000-$40,000), are often underestimated by foreigners.

Ongoing costs feel like a gentle breeze compared to global markets.

Navigating Risks in 2025

A projected oversupply of 41,000 units may slow price growth. Mitigate by choosing trusted developers like Nakheel or Imtiaz, verifying escrow compliance under the 2025 Oqood system, and targeting low-vacancy projects (2-3%). Ensure QFZP and VAT compliance to avoid fines. Short-term rentals leverage 25 million tourists, while long-term leases ensure stability. Proximity to Deira drives value.

Why Dubai Islands Are a Foreigner’s Dream

Haven Living, Beach Walk Residences, Azura Residences, Cotier House, and Villa del DIVOS offer no personal income tax, capital gains tax, or property taxes, saving $12,000-$140,000 annually. With 4-6% yields, 8-12% price growth, and Golden Visa perks, these 2025 projects make Dubai Islands a vibrant, tax-smart haven for foreigners, provided they navigate transfer and VAT costs carefully.

read more: Hidden Tax Costs Expats Should Know When Buying in Dubai