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Why is VAT not even an indirect factor in residential sales?

By removing VAT on mortgage payments, UAE residential market is getting ample support

Image Credit: Corbis
A bird's eye view of Dubai.
Gulf News

Dubai: Sure, all property assets deemed as residential come under the 0 per cent VAT regime in the UAE. But for property buyers wanting to get into the market now, there is not even an indirect VAT element they need to watch out for.

Because mortgage transactions on residential property will have a zero rate. This is very much the line that UAE authorities have taken with all essential banking services, which too are VAT exempt. And a point the authorities have been highlighting in their messaging ahead of the VAT roll-out.

The absence of VAT in mortgage payments will ensure end-user activity remains on an even keel. This way, the UAE authorities have managed to remove even the slightest chance of VAT setting off inflationary pressures in the residential property marketplace.

But developers will still need to handle their launch and sales strategies with extreme care in the first few months of 2018. It will take some time before UAE consumers adjust to buying in a marketplace where VAT charges start showing up in their bills. But at least the property buyers among them will not have to worry about VAT on their home purchase. Or on their mortgage payments.