The most frequent instances of a Hiba transfer in Dubai include ownership transfers from one person to another person following the requirement established by the Dubai Land Department, being that such transfers can only occur between first-degree relatives. However, a Hiba transfer from an individual to a corporate body is also an option (or vice versa). There are a few considerations you should make when it's time to transfer property from a person to a corporation in the UAE.
In this article, we'll walk you through the steps involved in "gifting" (transferring) your property to a business in the United Arab Emirates. Therefore, this article is for you, whether you are an individual trying to transfer your property to a corporation or a start-up wishing to specialize in managing your clients' properties!
What is property gifting?
In the UAE, property gifting often refers to changing a name on a title deed so that ownership of the property is now in the recipient's name. The objective is to protect the property from regional inheritance laws. Gifting a real estate property are given to either offshore firms or families. Property gifting, which can be done with all or a portion of the subject property, is the voluntary transfer of property ownership from one person to another.
How to transfer property from a person to a company in the United Arab Emirates?
If you have ever been to an Islamic nation, you may be familiar with the idea of a "Hiba Transfer." Simply put, a Hiba transfer is a gift one person gives to another, usually a first-degree cousin. But if you choose, you may also provide that exact thing to a company (and vice versa). Inheritance planning or general property management are two reasons you would wish to entrust a property to a corporation so that later generations can profit from the assets. If you are unfamiliar with Sharia Law in the UAE, inheriting property might be challenging.
You may want to know: Property Transfer Procedure in Dubai
Corporate forms that are entitled to hold companies
Not all business entities are permitted to own property in the UAE. It is essential to remember that only specific corporate forms are now allowed by the Dubai Land Department to hold properties under a corporate structure. The most popular is the JAFZA Offshore, although others are also gaining popularity, including those under the DMCC and DIFC jurisdictions. However, it is feasible for such structures' shareholders to be either persons or other business organizations, e.g. overseas companies such as those registered offshore.
Property gifting to a company in Dubai: why is it a great idea?
- Inheritance Planning
Inheritance planning is frequently one of the major causes of this. Property inheritance issues can be challenging, especially for someone unfamiliar with Sharia law or UAE legality. It eliminates any restrictions imposed by local inheritance rules by allowing the property to be transferred into the hands of a corporation located within or outside the UAE. The former property owners still indirectly own it through a company outside the United Arab Emirates since they are the company's shareholders.
- Able to Maintain ownership and control over the property
Another benefit of transferring property to a company in Dubai is that existing owners can maintain control and legal ownership over their properties in the UAE thanks to this ownership arrangement.
- Long-term Estate Planning
Company transfers benefit people wishing to create a long-term estate-planning strategy for future generations because children or spouses may continue to profit from and potentially transfer their future assets into the company.
You may want to know: UAE Property Ownership for Expatriate
Gift property to company in Dubai: important points to consider
Given that the ramifications differ from those of a transfer made by an individual to another individual, it is crucial to be aware of the following peculiarities and changes when gifting property to and from a company:
- You must first possess the original title deed to establish that the property in question is yours. Always remember that mortgaged and off-plan units cannot be given as gifts.
- The property transfer should be in proportion to the Shareholders' ownership, as expressed in the percentage of the property being transferred.
- It's undoubtedly more challenging to gift property to the companies. Specific permits are necessary from the applicable jurisdiction and the Dubai Land Department, and all firm documentation must be produced with attested translations.
- According to existing laws, a 4 per cent stamp duty imposed by the Dubai Land Department must be paid upon every transfer of title to any real estate. The fact that a Hiba transfer is exempt from the majority of this cost reduces the fee to just 0.125 per cent, in line with the property valuation established by the Dubai Land Department, which is one of the significant advantages of a Hiba transfer.
- The considerations mentioned earlier must be made to perform a Hiba transfer successfully. If the parties aren't in the UAE when the deal is made, the complete process may be readily managed with the assistance of a Power of Attorney professional. The procedure may become more challenging if more than one transfer is required to produce the desired outcome.
At HHS Lawyers and Legal Consultants, we have considerable expertise advising clients on property gifting to a company in Dubai. You can transfer your property through the Dubai Land Department's "Gift Transfer" procedure. Due to the region's predominance of Sharia Law, gift transfers are common in Dubai for succession, tax structuring, and inheritance purposes.
Our property lawyers in Dubai will spend enough time understanding your needs to make the finest recommendations and properly prepare the required documents