What are all the property taxes and fees in Bahrain?

Authored by the expert who managed and guided the team behind the Bahrain Property Pack

Everything you need to know before buying real estate is included in our Bahrain Property Pack

Who is the author of this content?

SANDS OF WEALTH

A team specialized in real estate investing in MENA countries (Morocco, UAE, Oman, etc.)

We are a team of financial experts, legal professionals, developers, and local real estate specialists dedicated to helping people like you avoid mistakes when investing in real estate in a foreign place, particularly in Bahrain. If you'd like to learn more about us, you can check our presentation page.

How this content was created 🔎📝

At Sands of Wealth, we explore the Bahraini real estate market every day. Our team doesn't just analyze data from a distance—we're actively engaging with local realtors, investors, and property managers in cities like Manama, Riffa, and Muharraq. This hands-on approach allows us to gain a deep understanding of the market from the inside out.

These observations are originally based on what we've learned through these conversations and our observations. But it was not enough. To back them up, we also needed to rely on trusted resources

We prioritize accuracy and authority. Trends lacking solid data or expert validation were excluded.

Trustworthiness is central to our work. Every source and citation is clearly listed, ensuring transparency. A writing AI-powered tool was used solely to refine readability and engagement.

To make the information accessible, our team designed custom infographics that clarify key points. We hope you will like them! All illustrations and media were created in-house and added manually.

Does Bahrain charge property taxes on residential properties?

Bahrain does not impose any annual property taxes on residential properties.

As of September 2025, property owners in Bahrain - whether local or foreign - are not required to pay recurring property taxes on their residential real estate holdings. This policy applies to all residential property types including apartments, villas, and townhouses across the Kingdom.

The absence of property taxes makes Bahrain one of the most attractive destinations for residential property investment in the Gulf region. Unlike many other countries where property owners face annual tax obligations ranging from 0.5% to 3% of property value, Bahrain property owners enjoy complete exemption from such recurring costs.

This tax-free status significantly reduces the long-term cost of property ownership and enhances the overall return on investment for residential real estate purchases in Bahrain.

Are there property taxes for non-residential properties in Bahrain?

No, Bahrain does not charge property taxes on non-residential properties either.

Commercial properties, office buildings, retail spaces, and other non-residential real estate enjoy the same tax-free status as residential properties. Property owners of commercial real estate in Bahrain are not subject to annual property taxes regardless of the property type or location within the Kingdom.

However, commercial property owners should be aware that a 10% municipal tax applies when these properties are rented to expatriate tenants. This municipal tax is calculated based on the annual rental value and is the responsibility of the property owner, not the tenant.

The lack of property taxes on commercial real estate makes Bahrain particularly attractive for foreign investors looking to establish business operations or generate rental income from commercial properties in the Gulf region.

Is there a difference in tax rates between local and foreign property owners?

No, there is no difference in property tax treatment between local Bahraini citizens and foreign property owners.

Both locals and foreigners benefit equally from Bahrain's zero property tax policy. Foreign property owners face the same tax obligations (or lack thereof) as Bahraini nationals when it comes to property ownership, capital gains, and rental income taxation on an individual level.

The only distinction relates to property rental situations: the 10% municipal tax applies when properties are rented to expatriates, regardless of whether the property owner is local or foreign. This means a Bahraini citizen renting to an expatriate would also be subject to this municipal tax.

Foreign investors can own property outright in designated freehold areas such as Juffair, Seef, Amwaj Islands, and other approved developments, enjoying the same tax benefits as local property owners.

It's something we develop in our Bahrain property pack.

How is property value determined for tax purposes in Bahrain?

Since Bahrain does not impose annual property taxes, there is no ongoing government valuation process for tax assessment purposes.

Property values are only relevant for transaction-related fees, specifically the 2% registration fee charged when properties are bought or sold. For these transaction fees, the value used is the declared sale price stated in the purchase contract.

The registration fee calculation is straightforward: it's based on the actual transaction value declared between buyer and seller, not on a government-assessed valuation. This means property owners don't need to worry about annual reassessments or valuation disputes that are common in countries with property tax systems.

When properties change hands, both the buyer and seller share the 2% registration fee based on the agreed purchase price, making the process transparent and predictable for all parties involved.

What are the fees for registering a property in Bahrain?

Property registration in Bahrain requires a 2% fee based on the property's purchase price, which can be reduced to 1.7% if paid within 60 days of contract notarization.

The registration process involves several components: the main registration fee of 2% (or 1.7% for early payment), plus small administrative fees of BD 1 for the registration form and BD 5 for various certificates and services required during the process.

Both buyer and seller typically share the registration fee equally, meaning each party pays 1% (or 0.85% if paid early) of the property value. For a BD 100,000 property, the total registration fee would be BD 2,000, split BD 1,000 each between buyer and seller.

Additional costs may include legal fees ranging from 0.5% to 1% of the property value for notary services and legal representation, though these are optional but highly recommended for foreign buyers to ensure proper documentation and legal compliance.

What are the costs associated with transferring property ownership?

Cost Type	Rate/Amount	Who Pays
Registration Fee	2% (1.7% if paid within 60 days)	Split between buyer and seller
Real Estate Agent Fee	1-5% of purchase price	Typically seller, varies by agreement
Legal/Notary Fees	0.5-1% of property value	Usually buyer
Administrative Fees	BD 1-5 per document	Various
Bank Transfer Fees	Varies by bank	Buyer
Translation Fees	BD 50-100 (if required)	Buyer
Property Valuation	BD 200-500 (if required by bank)	Buyer

Are there any annual fees for maintaining property ownership?

No, there are no annual fees required to maintain property ownership in Bahrain.

Property owners do not face recurring annual costs such as property taxes, land taxes, or government maintenance fees. Once you own a property in Bahrain, the only ongoing costs are related to property maintenance, utilities, and building management fees if applicable.

The only exception to this fee-free ownership structure is the 10% municipal tax, which applies only if you rent your property to expatriate tenants. This tax is calculated on the annual rental value and is paid by the property owner, not the tenant.

For properties that remain owner-occupied or vacant, there are no government-imposed annual fees whatsoever, making Bahrain extremely cost-effective for long-term property ownership compared to other international markets.

Is there a stamp duty for property transactions in Bahrain?

Yes, Bahrain charges a stamp duty of 2% on property transactions, which is effectively the same as the registration fee.

The stamp duty and registration fee are typically consolidated into a single 2% charge (reducible to 1.7% if paid within 60 days of contract notarization). This means buyers don't pay separate stamp duty and registration fees - they are combined into one transaction cost.

This stamp duty applies to all property transfers, whether for residential or commercial properties, and is calculated based on the declared purchase price in the sales contract. The fee structure is transparent and standardized across all property transactions in Bahrain.

Compared to other Gulf countries where stamp duty and registration fees can be separate charges totaling 3-4% of property value, Bahrain's combined 2% fee represents excellent value for property investors.

It's something we develop in our Bahrain property pack.

We did some research and made this infographic to help you quickly compare rental yields of the major cities in Bahrain versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you're planning to invest there.

What are the land and building tax obligations in Bahrain?

There are no land or building taxes for property ownership in Bahrain.

Unlike many countries that impose separate land taxes, building taxes, or development taxes, Bahrain maintains a completely tax-free environment for property ownership. This applies to both the land component and any structures built on that land.

Property owners are not required to pay annual taxes based on land size, building area, or property improvements. Whether you own a small apartment or a large villa with extensive land, there are no recurring government taxes related to land or building ownership.

The only tax-related obligation for land and buildings occurs when properties are rented to expatriate tenants, triggering the 10% municipal tax on the annual rental value. This tax is specifically related to the rental transaction, not the mere ownership of land or buildings.

Are there any specific tax incentives for foreign investors in property?

Foreign property investors in Bahrain enjoy several significant tax advantages that serve as strong incentives for international real estate investment.

1. **Zero property taxes**: Foreign investors pay no annual property taxes on their real estate holdings2. **No capital gains tax**: Profits from property sales are completely tax-free for individual investors3. **No rental income tax**: Individual property owners don't pay tax on rental income generated from their properties4. **100% foreign ownership**: Foreigners can own property outright in designated freehold areas without local partnerships5. **No inheritance tax**: Properties can be passed to heirs without tax implications6. **No wealth tax**: Property holdings don't contribute to any wealth or net worth tax calculations7. **Currency freedom**: No restrictions on currency used for property transactions or repatriation of funds

These incentives make Bahrain one of the most attractive property investment destinations in the Middle East, offering foreign investors the same tax treatment as local citizens while providing complete ownership rights in approved developments.

Do property owners need to pay any municipal or local government fees?

Property owners in Bahrain only pay municipal fees when they rent their properties to expatriate tenants.

The municipal tax rate is 10% of the annual rental value and applies specifically when properties are leased to expatriate residents. This fee is charged to the property owner, not the tenant, and is paid to the local municipality where the property is located.

For owner-occupied properties or properties rented to Bahraini nationals, no municipal fees apply. The 10% municipal tax is the only local government fee that property owners may encounter, and it only applies in specific rental situations involving foreign tenants.

Properties that remain vacant or are used by the owner don't incur any municipal fees, making property ownership in Bahrain exceptionally cost-effective for investors who don't rent to expatriates.

Are there taxes on property sales or capital gains in Bahrain?

No, Bahrain does not impose any taxes on property sales or capital gains for individual property owners.

When you sell a property in Bahrain, the entire proceeds from the sale are tax-free, regardless of how much profit you made or how long you owned the property. This applies to both residential and commercial properties, and there are no distinctions between short-term and long-term holdings.

Foreign investors benefit from the same capital gains tax exemption as local property owners, making Bahrain particularly attractive for international real estate investment strategies. Whether you sell a property after one year or ten years, any appreciation in value is yours to keep without tax obligations.

This zero capital gains tax policy extends to all types of property transactions, including sales of developed land, residential units, and commercial properties, providing maximum flexibility and profitability for property investors in Bahrain.

It's something we develop in our Bahrain property pack.

Conclusion

This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.

Sources

1. Global Property Guide - Bahrain Taxes and Costs
2. Immigrant Invest - Countries Without Property Tax
3. Veles Club - Bahrain Property Investment
4. InvestAsian - Countries Without Property Tax
5. International Bar Association - Bahrain Tax Reform
6. PwC Tax Summaries - Bahrain Other Taxes
7. Bahrain Company Formation - Taxation in Bahrain
8. Sands of Wealth - Title Deed Bahrain
9. Bahrain Government - Property Registration Services
10. Global Property Guide - Bahrain Buying Guide