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Real Estate Investment VAT

Residential, commercial, and mixed-use — each has different VAT rules.

PROPERTYMarch 2026 · 7 min read

Property Type VAT Treatment

Property Type Sale Lease Notes
Residential (new) Exempt Exempt First supply of new residential building
Residential (existing) Exempt Exempt Subsequent sales and all leases
Commercial 10% 10% Offices, retail, industrial
Mixed-use Split Split Apportion by area or revenue
Bare land Exempt 10% Sale exempt; lease standard-rated

Capital Goods Scheme

Property costing more than BD 30,000 is subject to the Capital Goods Scheme. Input VAT claimed at acquisition is adjusted over a 10-year period. If property use changes from taxable to exempt (or vice versa), the annual adjustment reflects the new usage ratio. This is critical for developers who sell units as residential (exempt) after claiming full input VAT during construction.

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