Buying property in the UAE? 5 Legal issues you should consider

Whether you are investing in an apartment in the UAE or building an international property portfolio, owning real estate in multiple jurisdictions can create legal and tax considerations that extend far beyond the purchase itself.

While the United Arab Emirates offers attractive investment opportunities, it operates under a different legal system, with its own rules regarding ownership, taxation, succession and dispute resolution.

Before acquiring property, here are some key issues worth considering.

I.              Choosing the right property structure

One of the first decisions is how the property should be owned.

Should you purchase in your personal name or through a company? Is a corporate structure appropriate for your investment objectives? How will the ownership structure affect future transfers, financing or succession planning?

The answer will depend on a number of factors such as your tax residence, your long-term objectives, the nature of the investment and your family situation. A structure that works well in one jurisdiction may not necessarily produce the same result in another.

The ownership structure should therefore be considered before the acquisition, rather than after the purchase has been completed.

II.            Can property ownership give you residence rights?

For many investors, purchasing property in the UAE is not only an investment decision but also part of a broader relocation or residency strategy.

Pursuant to the revised regulations introduced by the Dubai Land Department (DLD), the previous AED 750,000 minimum property value requirement for sole property owners applying for the two-year property investor residence visa has been removed. Sole owners may therefore qualify regardless of the property value, subject to the applicable eligibility criteria. For jointly owned properties, each co-owner must generally hold a minimum share value of AED 400,000 to qualify individually.

This development makes property-linked residency accessible to a broader range of investors and demonstrates Dubai’s continued efforts to facilitate international investment and attract foreign residents.

However, obtaining UAE residency should not be confused with becoming tax resident in the UAE.

Residency status, tax residence and domicile are separate concepts that must be analysed independently. For individuals moving between France and the UAE, acquiring property and obtaining residency may be only one element of a wider relocation strategy.

Before making an investment decision, investors should consider the interaction between property ownership, immigration status, tax residence and their broader personal and family circumstances.

III.        Tax implications

Tax considerations are one of the most important aspects to assess when owning property in different jurisdictions.

Determining where rental income or gains arising from real estate may be taxed requires an analysis of the applicable domestic tax rules and any Double Tax Treaty (DTT) between the relevant countries.

Under many Double Tax Treaties, income derived from immovable property may be taxable in the country where the property is located. For an investor owning real estate in the UAE, this may create favourable tax outcomes depending on their personal circumstances and country of tax residence.

However, the fact that income is generated from a UAE property does not automatically mean that no tax obligations exist in the investor’s home country. Tax residents may still have reporting obligations and, in certain circumstances, may be subject to taxation in their country of residence, with applicable treaty mechanisms designed to prevent double taxation.

A proper review of the investor’s tax residence, the applicable Double Tax Treaty and the nature of the income is therefore essential to avoid unexpected liabilities, penalties or compliance issues in either jurisdiction.

IV.         Succession planning

Property owners frequently focus on acquiring assets but postpone discussions about succession planning.

Yet owning real estate in more than one country may raise important questions regarding the applicable succession law, the recognition of wills, the administration of the estate and the transfer of assets to future generations.

Proper planning can significantly simplify these issues and provide greater certainty for your family.

V.             Cross border disputes

Disputes relating to property may involve contractual issues, construction defects, co-ownership disagreements, unpaid rent or enforcement proceedings.

When assets or parties are connected to more than one jurisdiction, resolving those disputes often requires careful coordination between different legal systems.

The choice of jurisdiction, applicable law and dispute resolution mechanism can significantly affect the outcome of a property related dispute.

Obtaining legal advice at an early stage can often prevent disputes from escalating and help preserve both time and costs.