Understanding Accounting for the Real Estate Sector
RERA (Real Estate Regulatory Agency) is the agency that regulates the property sector in the UAE. It operates under different government bodies in every emirate. In Dubai, it works under the Dubai Land Department (DLD) .
The UAE also follows the IFRS (International Financial Reporting Standards) 15, which is a model that standardizes financial reporting across the world. The rules can be difficult to understand for non-accounting individuals so this makes hiring an accounting service for real estate companies a necessity for businesses who want to stay compliant.
What Are the Challenges of Accounting for Real Estate?
1. Handling multiple revenue streams
Real estate companies often have several streams of income at any given time (rentals, apartment leasing, management fees, property sales). This can make tracking and managing your books quite difficult without proper systems in place.
2. Keeping up with laws and regulations
The UAE has various laws surrounding VAT, corporate tax, and financial reporting. These laws are always subject to change, which can be easy to navigate with the help of an accounting service for real estate companies. This also allows companies to avoid penalties and stay financially transparent.
3. Complexity in understanding real estate accounting
Real estate accounting requires niche, in-depth knowledge about topics like lease accounting, depreciation, cash flow accounting, and investment analysis. Incorrect reporting can lead to inaccurate financial statements, which can consequently affect tax liabilities. Meticulous bookkeeping when accounting for real estate transactions is key for managing diverse portfolios.
Benefits of Outsourcing Accounting for Real Estate Companies
1. Regulatory compliance
Failure to follow the outlined standards of reporting can lead to mistakes in tax returns, damage to reputations, and in some cases, penalties. Outsourcing your accounting to an external company can take the stress of staying compliant to all the laws and regulations. External accountants will stay updated on tax laws and make sure that your business stays on track.
2. Access to specialized expertise and software
Hiring experts that possess industry-specific knowledge about accounting for real estate transactions is an efficient way to ensure business success. They can recommend best practices that are tailored to your needs, and give you a bigger competitive advantage.
Outsourcing your accounting can also give you access to the latest software that can streamline processes and protect your data, making it much easier to monitor your progress throughout the year. Accounting software can often be expensive, so using them through an external company is an easy workaround.
3. Cost-effectiveness
By outsourcing their accounting service for real estate companies can reduce their operating costs. Managing in-house accountants can be a tedious and expensive process, so getting expert, external help can really keep expenses down.
4. Focus on core activities
Real estate companies who outsource accounting can better focus on their core business activities instead of worrying about compliance and general financial administration. Putting accounting for real estate transactions into expert hands can free up resources which can be put towards generating revenue. This also grants peace of mind to the business leaders.
How A&A Associate Can Help Real Estate Companies
Accounting services for real estate
A&A’s accounting services for real estate offers companies help from expert professionals who can assess and organize business needs, select appropriate accounting systems, and handle all accounting-related functions. They also offer:
VAT Consultancy
Tax services
Bookkeeping
Management accounting
Internal audits
Bookkeeping services
If you’re looking to hire A&A primarily for their bookkeeping services, this is what you’ll get:
Account review
Data entry
Financial charts
Bank reconciliations
VAT compliance
MIS reports
Auditing services
A&A Associate’s auditing services offer real estate companies experts who are qualified to conduct statutory audits to fulfill the requirements of the management, government bodies, banks, and free zones. The UAE imposes an annual audit requirement on every company, making it essential to hire experts who can impartially assess the state of your business and provide recommendations if necessary.
Contact us today at +971 54 793 9972 or email us at enquiry@aaconsultancy.ae to get expert accounting, bookkeeping, and auditing services tailored for your real estate company.
FAQ’s
Who Regulates Real Estate in the UAE?
Each emirate has its own land regulatory department. RERA (Real Estate Regulatory Agency) handles real estate regulations in Dubai, operating under the Dubai Land Department. ADREC (Abu Dhabi Real Estate Committee) is the real estate regulatory body. Every regulatory department handles tenancy and leasing regulations, licensing and registration, property development, regulating real estate professionals, and develops real estate policies.
Should I Outsource the Accounting for Real Estate Company?
What is the Meaning of Property Accounting?
What is the Accounting Standard Used in UAE?
Companies in the UAE follow the IFRS (International Financial Reporting Standards). The IFRS is a global accounting standard implemented by the International Accounting Standards Board (IASB) to create a universal language for financial reporting. Under the IFRS, companies have to prepare the following documents:
Balance sheet
Income statement
Cash flow statement
Equity statement
How Do I Register My Real Estate Company in the UAE?
To register your real estate business in the UAE, you need to decide on the type of business structure, choose a trade name, get approval from RERA, prepare the relevant documents, and get a business license. Once you have set up your business, you can decide to delegate the accounting for real estate transactions to an external firm to take the stress of regulatory compliance off your plate.
What is the Best Accounting Service for Real Estate Companies?
What Software to Use When Accounting for Real Estate Transactions?
There are many types of accounting software available to real estate companies. Some common options include QuickBooks, Xero, Zoho Books, Wave. If you hire an accounting service for real estate companies to handle your financial transactions, you can get access to advanced software that is personalized to your operations.
Is IFRS Applicable in the UAE?
The IFRS is the only accounting standard accepted in the UAE when filing corporate taxes. As the country becomes a global hub for business, more companies are adopting IFRS as a way to bolster their reputation and attract international investors.
Does Vat Exist for Real Estate in the UAE?
Real estate companies have to register for VAT if their taxable supplies exceed AED 375,000. This rule applies regardless of whether they operate in a free zone or on the mainland. Commercial properties are taxed at 5% VAT. However, owners can recover VAT on expenses like renovations and utilities. Working with an expert in accounting for real estate can help you navigate these laws.
