On May 15, 2024, the UAE announced the Blue Residency visa, a 10-year permit for individuals excelling in sustainability and modern technologies.
The rental yield calculator allows you to calculate the gross and net rental yields for your property.
The Rental Yield Calculator is designed for the Dubai real estate market. It uses AED (the currency of the UAE) but this doesn’t affect the calculations.
You can choose to include or leave out costs like loans and property management, which will change the net rental yield result.
The calculator will provide you the gross and net yield as well as the monthly rental income.
Also, you can also choose to get these results by email.
Rental yield is expressed as a percentage of how much cash an income-generating asset like a property produces each year from its initial purchase value.
Gross Rental Yield is a financial metric used to evaluate the performance of an investment property. This yield provides an indication of the return on investment before accounting for any expenses.
Additionally to the gross rental yield, the net rental yield takes into account the operating expenses associated with maintaining the property.
Rental income in Dubai, United Arab Emirates, is not subject to income tax. This also applies to income from rental properties.
Municipality Tax: In Dubai, residential tenants have to pay a rental tax of 5% of their annual rent, while commercial tenants have to pay a rental tax of 10% of their annual rent.
In Dubai, the municipal tax is 5% of the value of your rental agreement for all types of residential property, with a minimum annual tax of AED 450. This tax is due from the first day of the rental agreement.
To facilitate payment, the total annual amount is divided into monthly instalments.
If a property remains unoccupied or is used as holiday home rented to short term guests, the property owner is still required to pay the Municipality Tax, which is calculated based on the average rent as listed in the RERA rental index.
In Dubai, a good rental yield can vary depending on the financing method of the property:
For non-mortgaged properties, a realistic rental yield ranges from 4% to 5%.
For mortgaged properties, the expected rental yield is typically lower due to the costs associated with mortgage repayments. In this case, a rental yield of 0.5% to 1% is generally considered acceptable, reflecting the reduced net income after covering mortgage expenses.
In Dubai, rent is typically paid in a few specific ways, reflecting the city’s unique real estate market and practices:
Annual or Bi-annual Payments: The most common method of rent payment in Dubai is through post-dated cheques. Landlords usually require tenants to provide several cheques upfront for the entire year. It is standard for rent to be paid in one to four cheques per year.
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