Guide To Property Gifting in Dubai – Steps, Cost, Restrictions Explained
What is a property gift transfer?
A property gift transfer (also known as “a property grant”, or “a Hiba”) is a voluntary transfer of a property from a person to another person, without consideration. The person that grants/gifts the property is referred to as “a donor” while the person in receipt of the property is referred to as “a donee”.
How is a gift transfer different from a property sale transfer in Dubai?
The main difference of property gift transfer from a sale-and-purchase transfer is that there is no requirement of consideration (i.e. payment of sale proceeds) in the gift transfer. Moreover, in the case of property gifting, the Dubai Land Department (DLD) fees equal to 0.125% of the property value as opposed to the sale and purchase transfer, where the DLD fees equal to 4% of the property value. Thus, the government fees for the gift transfer are significantly less than the sale and purchase transfer.
Whom you can gift your property to in Dubai?
In Dubai, you can only gift your property to a “first degree relative” or to a company owned by you, or vice versa. Under the local legislation, the definition of “first degree relative” includes parents, children, and spouses. It is worth noting that relationships between siblings, and between stepchildren and stepparents, do not qualify as “first degree relatives” for the purposes of a gift transfer in Dubai. In other words, you would be able to gift your property only to your parents, spouse, or your children, while you would not be able to grant your property to your siblings, stepparents, stepchildren or any other relatives.
Moreover, you can also gift your property in Dubai to a company that is owned by you, or vice versa, from your company to yourself. Only specific companies registered in UAE are allowed to own properties in Dubai.
What are the restrictions?
It is important to underline that only ready properties with clear title can be gifted and an off-plan real estate cannot be gifted until completion and issuance of the title deed.
Gifting a mortgaged property requires approval or clearance from the mortgagee bank. In fact, prior to the gift transfer, the donor’s bank requires either to settle the loan in full or the bank can transfer the mortgage to the donee (i.e. receiver), if the donee meets the bank’s financing requirements.
Moreover, gifting the property two times (aka “double gifting”) is not permitted in order to prevent the possible misuse of the “first degree relative” rule. In accordance with a Directive introduced in November 2016, the Dubai Land Department are unlikely to authorize more than one gift transfer on any property in the Emirate. This means that if a property has been gifted once previously, it cannot be gifted again and the next change of ownership transaction on that property will likely be a sale-and-purchase transfer.
What documents will I need?
The required documents for property gifting in Dubai vary depending on whom you are going to grant your property to and the type of the property.
Primarily, you need to have the clear title deed to prove that the property in question does indeed belong to you. Bear in mind that an off-plan units cannot be gifted.
Moreover, you will need to provide the authorities with a proof of “first degree relationship” between the donor and the beneficiary of the property. In a child-parent relationship, this can be a birth certificate. In a husband-wife relationship, it is required to provide a marriage certificate and in some cases the letter from the Dubai Courts which confirms that the pair are still in spouse relationship. It is important to note that any birth certificate and/or marriage certificate issued outside of the UAE has to be duly legalized and translated.
If the donor and or the beneficiary is a company or a legal entity, constitutional documents (e.g. trade license, certificate of incorporation, share certificate, incumbency certificate, Memorandum and Articles of Association etc.) of such company or companies would also be required to establish the ultimate owners and the first degree relationship.
During the process, the property has to be valued by DLD to establish the government charges and various approvals and consent letters would be required from a developer, facilities management company and concerned authorities depending on the property being gifted and the type of property gifting.
How much will it cost?
The total price for the whole process will depend on the type, value and specific features of the property. Nevertheless, comparing to the sale-and-purchase transfer fees, the property gifting carries a far lesser transfer fee paid to the Dubai Land Department. In the gift transfer you are only required to pay 0.125% of the current official value of the property, or it share, being gifted. In addition, you will also incur some other costs payable to the real estate trustee office for property registration and issuance of the new title deed. Please contact us to get a free cost estimate for your property gifting.
Why to gift?
Gift transfers are very popular in Dubai for inheritance and succession planning purposes. It gives you a full liberty to transfer your property to your loved ones as per your wishes during your life time. Otherwise, after your life-time, all your assets including real estate, will be divided between the legal heirs by the court in accordance with the applicable laws. Unless there is a Will in place for non-Muslims, the court can distribute your assets between extended family members, which may not necessarily be as per your wishes.
Find our here how you can Protect Your UAE Real Estate Through Gifting.
Do I need to hire an expert for a gift transfer?
It is worth noting that although it may seem not a complicated transaction, the gift transfer can be rather lengthy and could take up to 6 weeks to complete it. So, in the event that the donor and/or the beneficiary are not able to attend the necessary formalities to complete the gift transfer, it is advisable to hire an expert in this filed to handle the whole process on your behalf.
We specialize in property gifting services and offer professional assistance for:
- Gifting Property to Children
- Gifting Property to Parents
- Gifting Property Between Husband and Wife
- Gifting Property to Company (or vice versa)
You may find our more about ‘Why Do I Need To Appoint An Expert For Property Gifting’ here.
Disclaimer: The content on this page is for general information purposes only and does not constitute as legal advice nor should it be used as a basis for any specific action or decision. Nothing on this page is to be considered as creating a lawyer-client relationship or as rendering of legal advice for any specific matter. Users of this website are advised to seek specific legal advice from their own legal counsel regarding any specific legal issues.