There are several ways to own property in Dubai. The best area to invest in are freehold-designated areas. The freehold titles can be registered in non-GCC nationals in designated areas such as Downtown Khalifa, ubai Marina, The Palm Jumeirah, Emirates Hills, The Springs, The Meadows, Jumeriah Lakes Towers, and The Lakes… This excludes Deira, Bur Dubai, Jumeirah and Umm Suqeim. Knowing this, here are four ownership structures in Dubai, and the positives and negatives of each type of ownership:
Individual ownership
First is the individual ownership. In order to buy and sell property, one must go to the Dubai Land Department (DLD) with a passport and sign the documents or appoint a representative through the power of an attorney. The benefit is that the title is registered in the individual’s name, and the process is simple and fast. Individual ownership makes buying and selling easy by allowing flippers to quickly move in and out of property investments. Some drawbacks are that it can be hard to decide property inheritance in the Dubai Court. Depending on your country of origin, there could be tax implications with rental income and capital gains.
Joint individual ownership
The second is joint individual ownership, which is common in people who are married. Similar to individual ownership it is simple and quick to transfer titles, but there are two people instead. Nonetheless, inheritance issues and taxes remain a problem. Moreover, unlike some rules where jointly owned property automatically goes to the surviving spouse, in Dubai the share is given to the deceased spouse.
Traditional offshore company ownership
The third form is traditional offshore company ownership. This is where investors registered real estate properties in the names of businesses established in traditional offshore jurisdictions. There are no local succession laws and no local inheritance because it is a company, not a person. Owners can give the shares in the business to buyers instead of giving away the property, this way they avoid the two percent transfer fee owed to the DLD.
However, setting up the right offshore structure can take time and needs good advisers and the correct paperwork. There are also fees due to corporate service providers and annual fees for the company to have a good reputation. The main drawback is that it is no longer legal for property to be registered with the DLD other than a Jebel Ali Free Zone offshore company. Since the DLD made guidelines that disallow any new registration of property in the name of non-native offshore companies, investors have to buy property in dubai via Jafza offshore businesses.
Jebel Ali Free Zone (Jafza) offshore company
The fourth form of ownership is the Jebel Ali Free Zone (Jafza) offshore company. They are quick and easy to set up, and can be owned by an offshore entity established in a traditional offshore jurisdiction. There are no local succession laws as the inheritance of the shares in the traditional offshore company are governed by the laws of that company’s jurisdiction. The shares in the offshore jurisdiction may be settled into a trust or transferred to a foundation. That means that money can go towards individual interests such as philanthropic gifts. Nonetheless, with all corporate structures, they take time and cost money to put in place.
There are many ways to own property in Dubai, and selecting the right one depends on factors such as: time, money, beliefs, local laws, tax implications and the quality of advisers.
Contact us to discuss with us about the best way to acquire property in Dubai. Our consultant will provide you all necessary information and guidance.