Property Owners Must Choose Between Managing Rentals Themselves or Using Agencies:
Short-term rentals and holiday homes have become profitable investments for property buyers in the UAE. Now, they must decide whether to operate under their own rental license or partner with an agency.
Dubai: Are you offering short-term rentals or holiday homes in the UAE? If so, it’s time to consider your corporate tax obligations.
If you manage short-stay rentals under your license, you need to register for corporate tax. However, if you lease out properties through a holiday home or property management company, your income is exempt from corporate tax.
When the UAE’s corporate tax rules were introduced, individual property investors were exempt from tax on earnings from property sales or rentals. Recent updates from the Federal Tax Authority (FTA) clarify the tax implications for licensed holiday home operators.
According to Girish Chand, Senior Partner at MCA Management Consultants, “Individuals holding a license to operate holiday homes and earning over Dh1 million annually will fall under the corporate tax scope.”
Chand explained the difference between real estate investment income and business income. “For example, selling apartments does not trigger corporate tax as no license is required. However, income from licensed operations like holiday homes will be subject to tax.”
“For jointly owned properties, each owner’s income share must be calculated separately to determine tax liability if the property is licensed for business use.”
Girish Chand of MCA Management Consultants
Third-Party Management Simplifies Tax Compliance:
Property owners may find it easier to assign rental management to an external agency. The FTA update states that if a third-party manages the renting and collects rent, the activity is considered real estate investment income and is not taxed.
Anna Skigin, Founder and CEO of Frank Porter, a company specializing in short-term rentals, said, “This will encourage landlords to work with companies like ours. Corporate taxes are paid by us, not individual landlords.”
“There are no personal income taxes in Dubai that would affect individual property owners.”
Anna Skigin of Frank Porter
Register for Corporate Tax:
For landlords managing short-term rentals under their own license, registration for corporate tax based on 2024 income must be completed by March 31, 2025, according to Chand.
“The tax year for individuals follows the calendar year,” he added.
