Is residential property exempt from VAT in the UAE?

Residential property is treated very differently from commercial property under UAE VAT. The first supply of a new residential building (sale or lease) within the period set by the VAT rules is generally zero-rated, meaning no 5% VAT is added to the buyer or tenant but the supplier can still recover related input tax. Subsequent supplies of residential property — for example, re-selling or re-letting an existing home — are generally exempt, so no VAT is charged and the supplier cannot recover input VAT on those costs. The practical effect for most residents renting or buying an existing apartment or villa is that no VAT line appears on the rent or purchase price. "Residential" has a specific meaning under the law and excludes hotels, serviced apartments and similar accommodation, which are taxed differently. Because the zero-rated-versus-exempt distinction affects input-tax recovery for developers and landlords, confirm the treatment with the Federal Tax Authority. For a development or portfolio, you can compare verified UAE legal and tax professionals on LEXAI to map the VAT position.