The UAE charges no income tax, capital gains tax or inheritance tax on your property. But if you are UK tax resident, the UK taxes your worldwide income and gains, so rent and profits from Abu Dhabi are normally taxable in the UK. Moving your tax residence to the UAE changes the picture. Take advice first.
In the UAE
- 0% personal income tax on rent
- 0% capital gains tax when you sell
- 0% inheritance tax
- No annual property tax. You pay the 2% registration fee once.
In the UK
UK tax residents are generally taxed on worldwide income and gains. That usually means:
- Rental income from your Abu Dhabi property goes on your UK self-assessment return.
- Capital gains tax may be due in the UK when you sell, worked out in pounds.
- Inheritance tax can apply to overseas assets, depending on your long-term UK residence.
Because the UAE charges no tax, there is normally no foreign tax to credit against the UK bill.
Who pays no tax at all
People who become UAE tax resident and stop being UK tax resident under the UK's statutory residence test may pay no tax on the property in either country. That is a personal decision with many other effects, so plan it with an adviser.
“From a tax perspective and tax mitigation perspective, does moving your money over to the UAE, especially in a real estate purchase, make sense? Absolutely.”
This is general information, not tax or legal advice. Personal circumstances vary, so speak to a qualified tax adviser in your home country before you buy.