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Gift transfers of properties are very popular in Dubai, mainly for inheritance or succession planning. A Gift Transfer (also known as “a Grant Transfer” or “a Hiba Transfer”) is a voluntary transfer of a property, or part of a property, from “an individual to another individual”, from “an individual to a company,” or “from a company to an individual”.
The individual, or the company, that grants/gifts the property is referred to as “a donor,” while the individual, or the company, in receipt of the property, is referred to as “a Donee”. It is important to note that an off-plan property cannot be gifted.
The main difference between a property gift transfer from a regular sale transaction is that there is no requirement for payment proof (i.e., payment or compensation). The property can be transferred from a Donor to a Donee on a gratuitous basis, and the Dubai Land Department (DLD) charges significantly lower fees in case of a gift transfer.
To whom should you gift your property?
A Dubai property owner can gift a property to any individual whom they so wish. However, a consideration of the transfer fees depends on whether the property gift or share of it, is to a “first-degree relative” or a distant relation. Under the local legislation, the definition of “first-degree relative” comprises relationships between parents and children, and between husband and wife. Relationships between siblings, stepchildren, and stepparents do not qualify as “first degree relatives”
Transfer fees & Costs involved:
Gift transfer of the real estate to a first-degree relative attracts a reduced Transfer Fee of 0.125% of the deemed value of the property. This is to your spouse, child, or parent. Gifts to any other persons attract the Standard 4% Transfer Fee. In addition, you will also incur some additional costs for the Evaluation Fee and Issuance of the New Title Deed.
What is needed for the Gifting Process?
If you want to proceed with a gift transfer, you are required to have a title deed and an affection plan for the property. You will then;
- Apply for a valuation of the property by the Land Department
- Pay off any outstanding charges relating to the property
- Obtain a NOC from the developer
- Submit all of the Documentation proving the relationship based on which you are applying for the reduced transfer fee to be applied
- Visit the Registration Trustee Office, submit the Documents, pay the Transfer Fee and get the new Title Deed.
Documents required to prove a relationship
The required documents vary depending on whom you intend to gift your property to and the type of property.
- To prove the immediate relationship between husband and wife, the Land Department requires evidence usually in the form of a Marriage Certificate and Passport Copy of the spouse.
- Between child and parent relationship, a Birth Certificate and Passport Copies are required.
If the documents are issued outside the UAE, they need to be attested by the UAE embassy in the country of origin, then by the UAE’s Ministry of Foreign Affairs, and officially translated into Arabic.
Where the gifting involves an individual wishing to transfer a property from a company he wholly owns to himself (or vice versa) the individual is required to prove that the Ultimate Beneficial Ownership will be the same before and after the transfer.
One way property owners used to avoid the “first-degree relative” rule in transferring a property from one sibling to another was through a double gift transfer. For example, let’s assume Ahmed owned a studio in Dubai Downtown and wanted to gift it to his sister, Fatema. Under Dubai law, Ahmed and Fatima’s relationship is not considered as “first-degree relatives” To overcome this barrier; Ahmed would first transfer the studio to his mother, Maryam, who will then pass it over to Fatema, her daughter. However, the Dubai Land Department recently brought an end to such arrangements to prevent possible misuse. Under a new Directive introduced in November 2016, the Dubai Land Department is unlikely to authorize more than one gift transfer on any property in the Emirate. That means if a property has been gifted once, it cannot be gifted again. The next change of ownership transaction on that same property will likely be a sale-and-purchase transfer and attract the standard 4% transfer fee.
In case of a Divorce:
If, as part of the divorce settlement, you gift a jointly held property to your spouse but do so before the divorce is finalized, you would be entitled to the reduced 0.125% Gift Rate. But, if you complete that transfer a week after the divorce has been finalized, you will become liable for the standard 4% Transfer Fee.
Disclaimer: The content on this page is for general information purposes only and does not constitute legal advice nor should it be used as a basis for any specific action or decision. We advise our readers to seek specific legal advice from their own legal counsel regarding any specific legal issues.
