Dubai Property Ownership- Safeguarding your Dubai property investment by the formation of a corporation or family trust
In recent years it has become common practice for foreign owners to hold Dubai property in offshore structures. Certain people, whether resident or non-resident in Dubai can benefit from owning Dubai property through a company. This article outlines how one can purchase a Dubai property (in areas where foreigners may do so) through a corporate structure.
Benefits of purchasing Dubai property via a company or trust
• Avoidance of potential inheritance complications. By using an offshore company and/or an offshore trust the UAE rules of succession relating to real estate can be avoided. The use of an offshore company is certainly recommended and the addition of a trust can be valuable in certain circumstances, although this can be a complex area given that there may be tax consequences depending on an individual's domicile and residence. It may be wise to seek professional advice. • A company is a legal entity in its own right, so it never dies. Upon death, the shares in the company will only be dealt with under UAE law if the deceased's domicile is in the UAE • Tax efficiency • Framework for joint investments. Several investors can merge within an offshore structure and hold shares which reflect their property ownership ratios • Confidentiality. Purchasing a property via a British Virgin Islands (BVI) company, for example, provides an ideal vehicle for buyers who do not wish for their identity to be revealed. Details of shareholders and directors are not a matter of public record in BVI. • Asset protection. Many clients also use the company structure to protect investments such as equities, yachts and private aircraft. • Limited liability • Minimisation of transfer fees. On the sale of a property owned by a company it is the sale of company's shares which effects the sale rather than the sale of the property itself. Depending on the contractual agreement with the developer this could potentially avoid liability for transfer fees. • Mortgage facilities. Mortgages are available from selected banks in Dubai. They are primarily available to UAE offshore companies such as Jebel Ali and Ras-al-Khaimah, but not to BVI companies.
Before purchasing the property the first owner obtains a new offshore company and in most cases installs himself as the shareholder and director. The company then purchases the property.
The cost attached to the purchase and maintenance of the company is relatively low.
When the property is sold, it is not in fact the company which is sold, but the shares in the company are transferred to the new owner. Property developers in Dubai are generally familiar with the use of BVI companies. The documentation and administration required to transfer the ownership of a new BVI company can be
achieved in one working day.
Lesley-Anne Johnston is the Marketing Assistant at The ILS Group Limited, a fiduciary services provider with offices in ten countries worldwide.