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VAT on Real Estate

Residential, commercial, mixed-use — every property VAT rule explained.

VATMarch 2026 · 9 min read

Property VAT Rules

Transaction	VAT Treatment	Input Recovery
Residential rent	Exempt	No recovery
Commercial rent	Standard 10%	Full recovery
Residential sale (first)	Exempt	No recovery
Commercial sale	Standard 10%	Full recovery
Bare land	Exempt	No recovery
Mixed-use building	Partial	Pro-rata

Developer Issues

🏗️ Construction costs — standard-rated input, but recovery blocked if building residential

🏗️ Capital goods scheme — adjustment period of 10 years for property over BD 50,000

🏗️ Option to tax — not available in Bahrain (unlike UAE/UK)

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