I’m currently contemplating purchasing a property in Dubai, specifically within the Expo 2020 area, for a buy-to-let investment. There’s a new duet villa project called Yasmina that has caught my attention. With Dubai hosting Expo 2020 in this vicinity, the infrastructure is already in place, and residential projects are now underway.
The main reason I’m considering this investment is that they’re offering me an attractive post-handover 8-year payment plan, coupled with the appeal of tax-free income.
I’d greatly appreciate any advice or insights from those experienced in property investment or familiar with the Dubai real estate market. Does this seem like a sound investment opportunity? Are there any potential pitfalls I should be aware of?
Looking forward to hearing your thoughts. Thank you!
It’s almost impossible to answer your question without knowing your UK tax liabilities in full. Even your nationality can’t be assumed to be irrelevant.
I’ve lived in the Middle East for 12 years of my life including 9 of them in the Gulf and have visited every country there. I’d say I’m pretty familiar with the culture and what business looks like in the GCC. I wouldn’t touch any real estate opportunities there with a barge pole. The housing market is super saturated, the business culture is unlike anything in Europe and the investment volatility is extremely high. If you don’t have long experience of Dubai, and I assume you don’t because you’re posting here rather than talking to your fellow Gulf expats, I would suggest that you haven’t the faintest idea what you are getting yourself into.
This:
is illustrative of my concerns. It implies that you are basing your entire motivation solely on their advertising. Who do you think actually wins in that scenario?
Your reaction to my post will be a good litmus test of how balanced your approach is to this investment opportunity.
Your rental income wouldn’t be completely tax free. Yes this isn’t taxed in UAE, but if you are resident in the UK and receive rental income from an overseas property, you will be taxed on this in the UK in the same way as if the property was located in the UK under the income tax rules. Depends on where you are domiciled for tax purposes.
Does this mean rental income earned in Dubai is subject to taxation for UK residents? How does UK tax law apply to rental income from overseas properties, including those in the UAE? Does domicile status affect tax obligations in this scenario?
well not really. Mita gives an outline, but domicile is actually the wrong word. Domicile is legally a different category from resident and it’s highly likely that it’s your tax resident status that counts. It’s highly unlikely you are claiming foreign domicile. Possible, but unlikely.
Residency for tax purposes in the UK used to be simple, but in the last 10 years, the rules have become more complex. If you are living in the UK and you have foreign income of any kind (including property) you’ll need to declare this via a self-assessment and you’ll pay tax on it if that plus other income takes you over the relevant limits.