Dubai Real Estate: 5 RETT Exemptions Buyers Should Learn About in 2025

REAL ESTATE2 weeks ago

Dubai’s real estate market in 2025 is a global investment hub, with 99,000 transactions worth AED 326.7 billion in H1 and projected 5-9% price growth, per Dubai Land Department (DLD) data. Offering 6-10% rental yields, the market benefits from no personal income tax, capital gains tax, or annual property tax, with first-time residential sales zero-rated for VAT (0%), per Federal Tax Authority (FTA) rules.

The Real Estate Transaction Tax (RETT), known as the 4% DLD transfer fee under Law No. 7 of 2006, typically split between buyer and seller, adds significant costs e.g., AED 80,000 on a AED 2 million property.

Regulated by RERA, Dubai supports Qualifying Free Zone Persons (QFZPs) in Jebel Ali Free Zone with 0% corporate tax and the First-Time Home Buyer Program’s 5% discounts on properties up to AED 5 million. Below are five RETT exemptions buyers should leverage in 2025 to reduce costs and maximize returns in Dubai’s tax-advantaged market.

1. Family Transfer Exemption for Gifts and Inheritance

Property transfers to immediate family members (spouse, parents, children) via gifts or inheritance are exempt from the 4% DLD transfer fee, per DLD regulations. For a AED 3 million Downtown Dubai apartment gifted to a child, this saves AED 120,000. Submit a notarized gift deed or will (AED 2,000-5,000 cost) and family documents (e.g., marriage or birth certificates) to DLD.

Without a will, Sharia law may apply, so consult legal experts to ensure compliance. This exemption, critical for 43% of foreign-owned properties per EU Tax Observatory, preserves tax-free 6-8% rental yields and supports wealth transfer.

2. Veteran Exemption for UAE Armed Forces

UAE veterans, including former armed forces members with residency, qualify for a full 4% DLD fee exemption on residential purchases, per DLD guidelines. For a AED 2 million Jumeirah Village Circle (JVC) apartment, this saves AED 80,000. Provide proof of veteran status (e.g., military ID) and Emirates ID to DLD during registration.

Combine with the First-Time Home Buyer Programme’s 5% discount (AED 100,000) for properties up to AED 5 million, covering additional costs like conveyancing (AED 6,000-10,000), ensuring tax-free 7-9% yields and Golden Visa eligibility for AED 2 million+ purchases.

3. People of Determination Exemption

Buyers with a DHA-issued Sanad card, classifying them as People of Determination, are exempt from the 4% DLD fee on residential properties, per DLD regulations. For a AED 2.5 million Dubai Hills Estate apartment, this saves AED 100,000. Submit the Sanad card, Emirates ID, and title deeds to DLD at registration. Pair with 0% VAT on first-time residential sales (saving AED 125,000) and 5% First-Time Home Buyer discounts (AED 125,000) via Dubai REST, securing tax-free 6-8% yields and 8-12% capital gains by 2028.

4. Corporate Restructuring Transfer Exemption

Transfers of property between related corporate entities or from a company to an individual within the same group are exempt from the 4% DLD fee, per DLD rules. For a AED 4 million Palm Jumeirah villa moved from a DIFC entity to personal ownership, this saves AED 160,000.

Provide DLD with corporate documents proving common ownership (e.g., shareholder agreements) and pay legal fees (AED 10,000-20,000). Use QFZP structures in Jebel Ali Free Zone for 0% corporate tax on rentals (saving AED 25,200 on AED 280,000 income), ensuring tax-free 5.5-7% yields.

5. Government or Charitable Donation Exemption

Properties donated to government entities, public institutions, or registered charities are exempt from the 4% DLD fee, per DLD regulations. For a AED 3 million Business Bay property donated to a UAE charity, this saves AED 120,000. Submit donation agreements and charity registration documents to DLD, with notarization fees of AED 2,000-5,000.

While rare for individual investors, high-net-worth buyers use this for legacy planning, combining with 0% VAT on residential sales and no capital gains tax to preserve wealth and support tax-free 6-7.5% yields on other investments.

Why These Exemptions Matter

These five RETT exemptions family transfers, veteran status, People of Determination, corporate restructuring, and charitable donations save 4% on transaction costs, equating to AED 80,000-200,000 per property, per DLD data. Combined with Dubai’s 0% income, capital gains, and property taxes, they boost net yields by 0.5-1%, per AED 761 billion 2024 transactions.

Additional costs like 2% agency commission (+5% VAT), conveyancing (AED 6,000-10,000), and service charges (AED 10-53.7/sq.ft.) require budgeting, but RERA’s Mollak and escrow accounts ensure transparency. Dubai’s 6.2% GDP growth, 25 million tourists, and 90-95% occupancy drive demand, per DLD.

Implementation Strategies

Plan Family Transfers: Submit notarized gift deeds or wills to DLD for 4% RETT exemptions, avoiding Sharia law risks with legal advice.
Verify Veteran or Sanad Status: Provide military ID or Sanad card to DLD, combining with First-Time Home Buyer discounts via Dubai REST.
Execute Corporate Transfers: Use related-entity transfers with QFZP structures, saving AED 80,000-160,000 and ensuring 0% corporate tax.
Donate Strategically: Work with registered charities and DLD for donation exemptions, minimizing notarization costs.
Confirm Residential Status: Verify via DLD title deeds for 0% VAT, saving AED 100,000-150,000 on first-time sales.
Budget Hidden Costs: Plan for 2% commission (+5% VAT), conveyancing, and service charges, using Mollak for transparency.
Plan Home-Country Taxes: U.S. investors use IRS Form 1118 for DTA credits; Indian investors comply with Liberalised Remittance Scheme ($250,000 limit). Muslim investors account for 2.5% Zakat (e.g., AED 4,000 on AED 160,000 rent).

Outlook for Dubai’s 2025 Market

Dubai’s Economic Agenda D33, 2040 Urban Master Plan, and infrastructure like Metro Blue Line and Al Maktoum Airport fuel demand, per DLD. Despite 76,000 new units, 90-95% absorption rates and RERA protections mitigate oversupply. Off-plan sales (70% of Q1 2025) with 5-20% discounts and DLD waivers enhance affordability, per Dubai Real Estate Strategy 2033. These RETT exemptions position buyers to maximize savings in Dubai’s tax-advantaged market.

Conclusion

Family transfers, veteran exemptions, People of Determination exemptions, corporate restructuring, and charitable donations are five critical RETT exemptions for Dubai buyers in 2025. Saving 4% on transaction costs and leveraging 0% VAT and no capital gains tax, these exemptions preserve 6-10% yields and 8-15% gains. With RERA compliance, strategic budgeting, and home-country tax planning, investors can thrive in Dubai’s dynamic, tax-free real estate landscape. Dubai RETT Exemptions