Gifting Property in Dubai, UAE

What is Property Gifting?

Property gifting is a widely practised and highly beneficial method of transferring property in Dubai. Commonly known as “hiba” in Arabic, property gifting involves voluntarily transferring ownership, either in full or partially, between individuals, individuals and companies, or companies to individuals. The most significant reason for property gifting in Dubai is the succession planning and inheritance purpose, making it an attractive option for many. Gifting property provides an exemption from the standard 4% transfer fee. Notably, transfers between first-degree relatives can qualify as gift transfers, resulting in additional cost savings at the Dubai Land Department.

How does Property Gifting work in Dubai?

The Dubai Land Department (DLD) has specific rules and regulations that determine who is eligible to engage in property gifting. Typically, this process is available for transfers between first-degree relatives, such as parents to children or between spouses. Other relationships may also be considered, but it’s essential to understand the eligibility criteria.

What is the process of property gifting in Dubai?

The gifting property process can be a cost-effective and strategic choice for various reasons, such as succession planning, inheritance, or other personal circumstances. There are essential steps and factors in the process of property gifting in Dubai. Let’s break it down in a straightforward manner:

1. Title Deed Requirement
   Before you can proceed with property gifting, the property must have a valid Title Deed.
   Off-plan apartments, unfortunately, cannot be used for gifting at the Dubai Land Department.

2. Documentation You Need:
   To facilitate the gift transfer, you’ll need an Affection Plan, which is essentially an official site plan.
   You must also obtain a Valuation Certificate from the Dubai Land Department. This certificate determines the property’s value, which, in turn, helps calculate the transfer fees.

3. No Objection Certificate (NOC):
   A No Objection Certificate (NOC) is a crucial document required for all property transfers in Dubai.
   The NOC, provided by the developer, certifies that they have no objections to the ownership transfer and that there are no outstanding dues or obligations related to the property.

4. Payment of Transfer Charges:
   In property gifting, transfer fees are notably lower compared to traditional transactions. The donor needs to pay the transfer charge, along with an administrative fee and a registration trustee fee.

5. Title Transfer Process:
   All involved parties need to be present during the process, making it highly advisable to use a Power of Attorney.
   Utilising a Power of Attorney can save you significant time, money, and inconvenience.
   Once the required documents are submitted and the fees are paid, the trustee office will execute the property transfer.
   This results in the issuance of a new Title Deed in the name of the recipient (donee), officially transferring ownership.

Documents Required to Transfer a Property as a Gift in Dubai

When it comes to gifting properties in Dubai, the Dubai Land Department has specific legal requirements to ensure a smooth and legitimate process. These requirements involve providing legalised evidence of documents, which are essential for different types of property gifting. Here’s a breakdown of what you need to know:

For Individuals:

• Title Deed of the Owner:

The property’s title deed is a crucial document to establish ownership.

• No Objection Certificate (NOC) from the Developer:

The developer’s consent is required to confirm that there are no objections to the property’s transfer.

• Property Evaluation Certificate from Dubai Land Department:

This certificate determines the property’s value, an important factor in the gifting process.

• Birth Certificate:

If the gifting involves children or parents, you need their birth certificates.

• Marriage Certificate:

For spousal gifting, a marriage certificate is necessary.

• Attestation Process:

Certain documents, such as birth and marriage certificates, require attestation from the Ministry of Foreign Affairs in the origin country, the Emirates Embassy in the origin country, the Ministry of Foreign Affairs in Dubai, and Arabic legal translation.

• Original Passport, Visa, and Emirates ID:

Personal identification documents are a must.

• Succession Certificate:

In case of the owner’s demise and inheritance transfer, a succession certificate is required.

For Companies:

• Title Deed of the Owner:

Similar to individuals, the property’s title deed is essential for companies.

• No Objection Certificate (NOC) from the Developer:

Developer consent remains a crucial requirement.

• Property Evaluation Certificate:

Just as with individuals, the property’s value needs to be determined.

• Trade License for LLC Company:

For Limited Liability Companies, the trade license is a key document.

• Certificate of Incorporation:

This document is needed for companies in JAFZA (Jebel Ali Free Zone) or offshore locations.

• Certificate of Incumbency:

Another requirement for offshore companies.

• Certificate of Good Standing:

Necessary for offshore companies.

• Memorandum of Association (MOA) with Arabic Translation:

This document should be available to companies.

• Shareholder’s Passport, Visa, and Emirates ID:

Personal identification documents of shareholders are essential.

• Power of Attorney and/or Board of Resolution:

Depending on the situation, a power of attorney and/or a board of resolution may be required.

What is the cost of gifting a property in Dubai?

• In the traditional real estate market in Dubai, buying or selling a property incurs transfer fees of 4% of the purchase price, plus an AED 580 title deed fee at the Dubai Land Department(DLD).
• However, when opting for the Gift method, transfer costs are substantially reduced to just 0.125% of the property’s value, along with AED 580 (with a minimum of AED 2,680).
• Registration trustee fees range from AED 2,100 to AED 4,200, depending on the property’s valuation.

Who can receive a Gift of Property as per the UAE law?

Family:

To qualify for a gift transfer, the property must be transferred among parents or children. Transfers between siblings are not permitted. Property owners may choose to assign a property to particular family members to avoid the Sharia law distribution that would otherwise result, and in order to simplify succession issues. For example, a husband may transfer his share of a property to his wife, to avoid his siblings from inheriting it. Transfers are also used to remove a spouse from the title following a divorce.

Offshore Company:

In situations where the owners wish to maintain their ownership of the property, and yet avoid the Sharia law application, setting up an offshore company is the recommended course of action. This way, the property can be transferred into the ownership of a company outside of the UAE, thereby sidestepping the region’s inheritance laws. The company’s shareholders are the individuals who formerly owned the property, and therefore, they continue to indirectly hold the property through a non-UAE corporate entity.

Due to the low transfer fee for gift transfers, many individuals choose to go down this route. Company transfers are an especially valuable tool for setting up a permanent estate planning regime for future generations, one that your children can continue to benefit from, and even transfer their future assets into as well.

Advantages of Gifting Property in Dubai

Gifting property in Dubai offers several valuable benefits, making it a strategic choice for property owners. Let’s break down these advantages into subheadings:

1. Preventing Future Inheritance Issues:
   Gifting property enables you to proactively address future inheritance matters in the UAE. By doing so, you can circumvent the application of Sharia law distribution, giving you control over the property’s destiny. Choosing the next owner of your property simplifies the inheritance and succession process for your loved ones.
2. Establishing Ownership in Advance:
   Gifting your property allows your chosen beneficiary to establish ownership in advance. This is especially important in cases of unexpected events or if you were to pass away intestate, where property ownership could become complicated.
3. Cost Savings through Gift Transfer:
   Opting for a gift transfer, rather than a sale and purchase transfer, results in significant cost savings. In Dubai, a sale and purchase transfer incurs a 4% fee based on the sale price. On the other hand, a gift transfer carries a lower fee, amounting to just 0.125% of the deemed property value, with a minimum of AED 2,100. This means gifting to immediate family members, such as a spouse, comes with a substantially reduced transfer fee. Gifting to individuals outside your immediate family attracts a higher standard transfer fee of 4%.

In summary, gifting property in Dubai offers a proactive solution to inheritance concerns, streamlines property ownership, and provides notable cost savings. Understanding these benefits can help property owners make informed decisions regarding their real estate assets in Dubai.

Why Legal Assistance is Essential for Property Transfers in Dubai?

Property gift transfers in Dubai may appear simple, but they have complexities that require legal help. Here’s why having a legal expert is essential for a smooth and secure gift transfer process:

Understanding Local Laws:

Dubai has distinct property laws and regulations, which may differ from those in your home country. A legal expert is well-versed in these local laws, ensuring your gift transfer complies with all the necessary legal requirements.

Documentation Expertise:

Gift transfers involve various legal documents, including gift deeds and title deeds. A lawyer can review, draft, and ensure the accuracy of these documents, reducing the risk of errors that could lead to complications.

Due Diligence:

Lawyers conduct comprehensive due diligence to verify the property’s legal status, ensuring there are no unresolved issues, such as liens or disputes, that could affect the gift transfer.

Protection and Representation:

In the event of disputes or disagreements, a lawyer can provide legal protection and represent your interests, potentially avoiding costly legal battles.

Estate Planning Support:

If your gift transfer is part of estate planning, lawyers like TWS Legal Consultants can guide the legal and financial aspects, ensuring that your intentions are legally sound and law-abiding.

Peace of Mind:

Engaging a lawyer provides peace of mind, knowing that a legal professional is overseeing the gift transfer, minimising the risk of legal issues emerging in the future.

How can TWS Legal Consultants help you?

The gift transfer process, while seemingly simple on paper, can become a lengthy and complicated affair, especially when the property owner (donor) or the beneficiary (donee) is unable to participate in or attend all the required formalities to facilitate the gift transfer.

In this jurisdiction, it will work to your advantage to have a legal expert representing and advising you throughout the entire process.

TWS Legal Consultants can guide you during a gift transfer, whether it involves gifting property to your children, spouse, parents, or company (and vice versa). We can handle the whole process for you. With our expertise in property transfers and a deep understanding of Dubai’s legal landscape, we ensure a seamless and secure experience for our clients. Contact us today to make your property transfer in Dubai a smooth and legally sound process.