UAE Expands VAT Refunds for New Home Builders

The Federal Tax Authority (FTA) has launched a new initiative that expands the range of expenses eligible for value-added tax (VAT) refunds for UAE nationals building new homes, in a move aimed at supporting families and reducing construction costs.

The initiative comes in line with the UAE leadership’s directives and coincides with the Year of Family, reinforcing efforts to support home ownership and family wellbeing.

According to the FTA, the expanded list of eligible expenses is expected to generate around AED 200 million in VAT savings for Emirati citizens, with the average refund estimated at about AED 25,000 per claim.

The authority said the total value of approved refund claims is expected to exceed AED 1 billion in 2026, compared to around AED 754 million recorded in 2025.

More construction costs covered

The FTA explained that the initiative is now active and applies to all VAT refund applications submitted on or after January 1, 2026, provided all requirements are met.

Under the updated rules, UAE nationals can now claim VAT refunds on a wider range of construction-related expenses that form part of the residence and are intended for personal or family use.

Newly eligible items include staff accommodation for watchmen, drivers and domestic workers, home gyms, game rooms, integrated smart home systems and security systems, as well as electronic and smart doors for homes and garages.

The expanded list also covers swimming pools, fountains, decorative indoor water features, landscaping works and complete home reconstruction projects, including demolition and rebuilding costs.

The FTA said these features must be part of the residential property, built on the same plot of land and directly connected to the main residence in order to qualify for a refund.

Awareness campaign planned

The authority said it will organise awareness sessions across the UAE to help citizens understand the new initiative and how to benefit from it.

These sessions will be held at local district councils and will also provide an opportunity for residents to share feedback and suggestions on FTA services.

Abdulaziz Al Mulla, Director-General of the FTA, said the initiative reflects the UAE leadership’s commitment to supporting citizens and providing services that improve their quality of life.

He added that the expanded refund programme aims to make the process more transparent and easier for UAE nationals constructing new homes.

The FTA also confirmed that its digital VAT refund platform has been updated to include the newly approved categories, making it easier for applicants to identify eligible expenses and submit their claims.

Officials said the initiative is expected to provide meaningful financial support to families while encouraging home ownership and helping reduce the overall cost of building a new residence.

GN