UAE Nationals Building New Homes: FTA Expands VAT Refund Eligibility on Key Residential Features
The Federal Tax Authority (FTA) has updated its VAT Guide VATGRH1 (June 2026) following the implementation of FTA Decision No. 5 of 2026, effective from 1 January 2026.
The updated guidance brings welcome clarity for UAE Nationals constructing new residential properties, particularly regarding the VAT refund scheme available on construction-related expenses.
The latest update confirms that certain features commonly included in modern homes may now qualify for VAT recovery, provided they are installed as part of the original construction of the residence.
What Has Changed?
The revised guide provides additional clarification on the VAT treatment of:
- Landscaping and trees
- Electronic and smart doors or gates
- Integrated smart home and security systems
- Swimming pools, fountains, and decorative water features
This is particularly significant as many newly constructed villas now incorporate smart technology, automated access systems and extensive landscaping as part of their design.
An Important Condition to Remember
While the update broadens the scope of qualifying expenses, the FTA has clearly stated that timing plays a crucial role.
Landscaping works, smart systems, and security installations carried out after the completion of the residence will generally not qualify for a VAT refund.
In simple terms, homeowners should ensure that these features form part of the original construction project rather than being added as post-handover upgrades.
Why Does This Matter?
The VAT refund scheme allows eligible UAE Nationals to recover VAT incurred on the construction of a new residence built for their own use.
With construction costs continuing to rise, proper planning can result in substantial VAT savings.
Homeowners should therefore:
- Review project specifications carefully.
- Ensure qualifying items are included in the construction phase.
- Obtain valid tax invoices from suppliers and contractors.
- Maintain complete supporting documentation for refund applications.
Final Thoughts
The latest update to the VAT Guide VATGRH1 provides greater certainty for UAE Nationals building their dream homes. However, eligibility for VAT recovery will depend not only on the nature of the expense but also on when the work is carried out.
Proper planning during the construction stage can help maximise VAT recovery and avoid disputes during the refund process.
At Flying Colour Tax Consultants, we assist individuals and businesses in understanding UAE tax regulations, reviewing VAT refund eligibility, and ensuring compliance with Federal Tax Authority requirements.
Frequently Asked Questions
Q1. Can I claim VAT on the landscaping around my new villa?
Yes. Landscaping and trees may qualify for VAT recovery if they are included as part of the original construction of the residence.
Q2. Is VAT recoverable on smart home systems?
Yes. Integrated smart home and security systems installed during construction may be eligible for a VAT refund.
Q3. What if I install security cameras after moving into the property?
Generally, no. The updated guidance indicates that installations carried out after completion of the residence are typically not eligible for VAT recovery.
Q4. Are swimming pools eligible for VAT refunds?
Yes. Swimming pools, fountains and decorative water features can qualify if they are part of the initial construction project.
Q5. What documents should be maintained?
Applicants should retain tax invoices, contracts, payment records, completion certificates and any supporting documentation required by the FTA.|
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To learn more about UAE Nationals: FTA Expands VAT Refund on New Home Features, book a free consultation with one of the Flyingcolour team advisors.
Disclaimer: The information provided in this blog is based on our understanding of current tax laws and regulations. It is intended for general informational purposes only and does not constitute professional tax advice, consultation, or representation. The author and publisher are not responsible for any errors or omissions, or for any actions taken based on the information contained in this blog.