Can Phantom Tax arise in real estate investments?
-
Yes, Phantom Tax Meaning can arise in the investments in real estate especially in reit or in any kind of partnership structures. For instance, you can have a taxable income on the basis of charge in the value of property, although you have not sold it or even earned rental income on it. This means that despite being financially drained by the investment you may be presented with a tax bill that you can only meet through your money money investments. Real estate investors need to know this and prepare for this by setting aside some money to cater for this in future.
-
Yes, phantom tax can arise in real estate investments, particularly when property values increase but no actual cash flow is generated. This "unrealized gain" can still be taxed, creating a financial burden without liquidity. In the context of Corporate Tax in UAE, while the new corporate tax regime (effective June 2023) focuses on taxable income, real estate investors must carefully assess how unrealized gains might impact their tax liabilities. The UAE’s corporate tax framework exempts certain sectors, but real estate businesses and investment activities could still be subject to tax. Proper planning and understanding of both phantom tax implications and Corporate Tax in UAE regulations are essential to avoid unexpected liabilities and optimize investment returns.