We're invested in a real estate fund (REIT) — how is it actually treated for tax?

A Real Estate Investment Trust (REIT) faces two distinct tax layers, and mixing them up is the most common mistake investors make. The first layer is VAT on the underlying property income itself: commercial property rent or sale is subject to 5% VAT, while the first supply of new residential property (within 3 years of completion) is zero-rated with input VAT recoverable, subsequent residential leases or sales are VAT-exempt with no input recovery, and bare land is generally exempt subject to conditions.

The second layer is Corporate Tax, determined at the fund level depending on whether it meets the Qualifying Investment Fund conditions. For real estate funds specifically, this includes a minimum value of owned immovable property (currently around AED 100 million, including property held through special purpose vehicles), a portion of shares listed on a recognized exchange, institutional ownership spread across unrelated investors, and a requirement that the bulk of the property's value (roughly 70% or more) generates actual rental income rather than pure capital appreciation. These conditions were updated during 2025 and are now more detailed than the earlier version.

RASEEKH helps real estate fund investors and managers see the full picture across both layers — VAT on the property itself, and Corporate Tax at the fund and investor level — and confirms the investment structure actually maintains qualifying status, rather than discovering later that part of the income has become taxable retroactively.