How Australians can fund a Dubai property purchase.

What are the ways Australians can fund a Dubai property?

There are three common routes, and many buyers combine two of them. Each one changes how much you can spend, how much of your own money is needed and how long the purchase takes. The Australian buyers overview covers the wider sequence; this guide goes into the funding mechanics, as general information to check against advice on your own position.

How does paying cash from Australia work?

Cash is the simplest route: no lender approval, no bank valuation and no mortgage registration in Dubai. The risk is currency. The Central Bank of the UAE maintains a fixed exchange rate between the dirham and the US dollar, so a Dubai price in AED behaves like a US-dollar price for an Australian buyer. If the Australian dollar weakens against the US dollar between your offer and the transfer, the purchase costs more in AUD.

Ways buyers commonly manage that risk include converting the deposit when Form F is signed and planning the balance in stages, so not all of the money is exposed to one day’s rate. Whether to fix a rate in advance is a judgement about your own finances, not something to decide on a forecast.

Can you use equity in Australian property to buy in Dubai?

Often, yes. Australian lenders lend against Australian security, so using equity means a new loan, or an increase to an existing one, secured on your Australian home or investment property. The lender assesses it on your Australian income, expenses and existing debts. A Dubai property is generally not accepted as security by Australian lenders, so the money is released in Australia and then sent to Dubai.

This route can fund a cash purchase, or just the deposit and costs alongside a UAE mortgage. Two cautions from Moneysmart, the Australian Government’s money guidance service, apply directly:

• If you borrow against your home to invest and cannot keep up with repayments, you could lose your home.
• On a variable rate, repayments rise with interest rates; Moneysmart suggests checking whether you could still afford them if rates rose by 2% or 4%.

How the loan is structured, and how its interest is treated for tax, depends on your circumstances. Get credit and tax advice before you draw the funds.

Can an Australian resident get a UAE mortgage?

Some UAE banks lend to buyers who live overseas, on tighter terms than for UAE residents. In practice many lend roughly half to 60% of a ready home’s value, and each bank sets its own policy within the Central Bank’s rules.

Those rules set the outer limits for all mortgage lenders. For expatriates, the maximum loan-to-value is 80% on a first home up to AED 5 million, 70% above AED 5 million, and 60% on second and investment homes. Any off-plan purchase is capped at 50%. The maximum term is 25 years, and an expatriate’s loan is limited to seven years’ annual income, with repayments within a 50% debt-burden ratio. For an investment property, banks must deduct at least two months’ rent when assessing repayments, to allow for vacancies.

Registering the mortgage with the Dubai Land Department costs 0.25% of the loan plus small fixed charges, and the bank adds its own arrangement and valuation fees. A bank valuation below the agreed price reduces what it will lend, not the price you have agreed, so keep a buffer.

How much deposit do you need, and when is money due?

Take a hypothetical AED 3,000,000 ready home, not a real property, bought with a UAE loan of 50%. The bank lends AED 1,500,000, and you provide the other AED 1,500,000 plus costs. Those costs are mainly the 4% DLD transfer fee (AED 120,000), the trustee fee, agency commission and mortgage registration; the transfer costs guide works through each one. On a cash purchase, you need the full price plus the same costs, less mortgage registration.

Money is due in stages on a resale:

1. At Form F: the deposit, commonly 10% of the price, and often agency commission.
2. Before transfer: bank fees and, if borrowing, the final loan offer after valuation.
3. On transfer day: the balance, the DLD fee and the other charges, usually by manager’s cheques prepared in Dubai.

Allow time for funds to arrive. Moneysmart notes that international transfers can take up to five business days, and your own bank or the receiving bank may need longer for large amounts.

How do you move the money from Australia to Dubai?

Most buyers send funds by bank transfer or through a money transfer business. Moneysmart’s guidance is to compare the full cost, not just the fee:

• the exchange rate you actually get, and the margin built into it;
• whether the rate is fixed or can change before the money is sent;
• flat or percentage fees, and whether the receiving bank charges too;
• the largest amount the service will send, and how long it takes.

In Australia, money transfer businesses must be registered with AUSTRAC; check registration before you use one. AUSTRAC says you do not need to declare money you transfer through a bank or a money transfer business. Declarations apply when you physically carry, mail or ship cash or bearer instruments worth AUD 10,000 or more into or out of Australia. Expect banks, agents and other regulated businesses to ask where the money came from; AUSTRAC lists payslips, an accountant’s letter or a property sale record as examples of evidence.

How is a Dubai property taxed for Australian residents?

The Australian Taxation Office (ATO) says Australian residents for tax purposes must declare income earned anywhere in the world. That includes rental income from overseas real estate and capital gains on overseas assets, and all foreign amounts must be converted to Australian dollars in your return. Different rules apply to temporary residents.

A foreign income tax offset is available only where tax has actually been paid overseas on that income. The UAE does not levy income tax on individuals, so in many cases there may be no foreign tax to offset, but how this applies depends on your circumstances. Speak with an Australian tax adviser about ownership structure, deductions and record-keeping before you buy.

What documents should you prepare?

Each lender and bank sets its own list, but preparing these early saves weeks:

• passport, and proof of your Australian address;
• recent payslips or business financials, and your recent Australian tax returns and notices of assessment;
• bank statements showing savings, and statements for existing loans;
• evidence of source of funds, such as a sale contract or settlement statement if money comes from a property sale;
• for an equity loan, the details of the Australian property being used as security.

If you cannot attend the Dubai transfer, an attorney can sign for you under a power of attorney that meets UAE requirements. Arrange it well before transfer day. When funding is clear, a buying brief sets out what the budget can buy.

Frequently asked questions