Real estate is one of the few sectors in the UAE where a single transaction can fall into three completely different VAT treatments: zero-rated, exempt, or standard-rated at 5%, depending on whether the property is residential or commercial and whether it's the first sale after construction.
Quick answer: Under UAE VAT law (Federal Decree-Law No. 8 of 2017), the first supply of a new residential building within three years of completion is zero-rated (0%). Every later residential sale or lease is exempt. Commercial property, sold or leased, is standard-rated at 5%. Bare land and property in a VAT designated zone are treated differently again.
The full guide breaks down all three categories, how mixed-use buildings are apportioned, what FTA Public Clarification VATP018 says about a building's use changing after sale, and the input tax recovery consequences of each category.
Read the complete guide with FAQs and the input tax recovery table: https://qasproglobal.com/uae-vat-real-estate-2026/
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