Can I recover VAT on real estate expenses in the UAE?
Yes, VAT can be recovered for commercial real estate and the first supply of new residential properties (zero-rated). For exempt supplies, like subsequent residential sales, VAT recovery is not possible.
VAT recovery depends on the type of real estate transaction:
Commercial Properties
- Full VAT recovery available
- Includes purchase, maintenance, and improvement costs
- Must be VAT-registered business
- Property used for taxable business activities
Zero-Rated Residential
- Developers can recover all input VAT
- Includes construction materials and services
- Professional fees and permits
- Marketing and sales expenses
Exempt Residential
- No VAT recovery possible
- Applies to properties over 3 years old
- Landlords cannot recover VAT on expenses
- Individual property owners affected
Mixed-Use Properties
- Partial VAT recovery available
- Based on taxable vs exempt use
- Requires proper apportionment
- Detailed records needed
