The UAE Ministry of Finance has issued a new ministerial decision No 173 of 2025 outlining how depreciation adjustments will apply to investment properties held at fair value, under the framework of the country’s corporate tax law.

Property investors need to determine whether they want to enter the current market value on their properties in their tax records or opt for the price they originally bought at (even in the case of a property bought for own use). They need to apply this on all their properties for the first tax period starting 1 January 2025.

4% annual depreciation on property

This follows the UAE’s recent decision to allow property investors the benefit of a 4% depreciation each year on all investment properties they hold.  If the property is recorded at the original bought price, then the owner doesn’t get the benefit of depreciating the asset.

In effect, this is what the new tax option means for investors – if a property was bought for Dh2 million and now being sold for Dh4 million after 5 years, the investor can depreciate at 4% off the Dh4 million for each of the 5 years – and pay 9% corporate tax at the time of the sale.  

If the investor decides to hold the property at the original value in the tax records and then sells it at a higher price, he needs to pay the 9% corporate tax on the full difference.

In summary, this new rule can reduce the taxable income and subsequently reduce the tax payable amount.