Yes, usually. The UAE charges individuals no income tax or capital gains tax on property, but US citizens and green card holders are taxed on worldwide income wherever they live. Rent and sale profits go on your US return, with no UAE tax to credit against them. A Golden Visa or moving to the UAE does not change that.
In the UAE
- 0% personal income tax on rent
- 0% capital gains tax when you sell
- No annual property tax. You pay the 2% registration fee once.
In the US
- Rent goes on Schedule E in dollars. You can deduct expenses such as service charges, management fees and mortgage interest.
- Depreciation on a foreign rental generally runs over 30 years, not the 27.5 years used for a US rental.
- Selling. Your gain is taxed in the US, and depreciation you have claimed can be recaptured.
- Your own home. The main-home exclusion can apply to a foreign home if you meet the ownership and use tests. It does not cover a pure investment.
- No credit to claim. With no UAE tax paid, there is nothing to set against the US bill. The US also has no income tax treaty with the UAE.
- State tax. Your state may tax the income too. California taxes residents on worldwide income, for example, while Nevada has no state income tax.
Forms to raise with your CPA
| Situation | What it can trigger |
|---|---|
| You own the property directly in your own name | Not reportable on Form 8938 or the FBAR just because you own it |
| You open a UAE bank account, for rent for example | FBAR if all your foreign accounts together pass $10,000 at any point in the year. Form 8938 if you pass its higher limits. |
| You hold it through a foreign company or trust | Extra filings such as Form 5471, 8858 or 3520. Get advice before you set one up. |
If you move to the UAE
US citizens stay in the US tax system wherever they live. The foreign earned income exclusion covers earned income such as salary, not rent or capital gains, so it does not shelter this property.
When you die
US citizens are subject to US estate tax on worldwide assets, including UAE property. The UAE has no inheritance tax, but it does have its own succession rules, so see what happens to your property if you die.
IRS sources: Publication 54, Publication 527, Form 8938 and FBAR comparison, US tax treaties A to Z.
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.