The real estate transaction tax in Saudi Arabia is 5% of a property's value. It's calculated on the agreed price or the fair market value, whichever is higher. The seller is the person liable to pay, and the tax must be settled before or at notarization.
Saudi citizens buying a first home get a relief: the State covers the tax on up to SAR 1 million of the property's value.
Those headline numbers hide the details that change what you actually pay. A seller who writes a low price in the contract can be reassessed. A buyer can end up jointly liable without realizing it.
This guide is based on official documents from the Zakat, Tax and Customs Authority (ZATCA). It explains the real estate transaction tax in Saudi Arabia with worked examples you can check yourself.
Last reviewed: October 2026. This guide to the real estate transaction tax in Saudi Arabia follows the implementing regulations in force since April 2025 and compares them with the earlier rules, so you don't calculate on an outdated basis.
| Item | Answer |
|---|---|
| Rate | 5% |
| Base | Agreed price or fair market value, whichever is higher |
| Who pays | The seller in principle; the buyer is jointly liable in specific cases |
| Deadline for a notarized sale | Before or at notarization |
| Rent | Not subject to the tax |
| First home for a citizen | The State bears the tax on up to SAR 1 million of value |
| Main reference | ZATCA's detailed RETT guideline |
The detailed guideline is informational and doesn't amend the law. Where the English and Arabic versions differ, the Arabic prevails, so check the Arabic text before making any decision.
The real estate transaction tax in Saudi Arabia (RETT) took effect on 4 October 2020 under a royal order. It replaced the VAT that used to apply to real estate supplies. In April 2025, the tax's law and its implementing regulations came into force, as the detailed guideline explains.
The change made a big difference to buyers and sellers under the real estate transaction tax in Saudi Arabia. A SAR 1 million sale used to carry SAR 150,000 in VAT at 15%. Under RETT it carries SAR 50,000, a saving of SAR 100,000.
| Deal value (SAR) | Former VAT at 15% | RETT at 5% | Difference |
|---|---|---|---|
| 500,000 | 75,000 | 25,000 | 50,000 |
| 1,000,000 | 150,000 | 50,000 | 100,000 |
| 2,000,000 | 300,000 | 100,000 | 200,000 |
The figures come from ZATCA's simplified guide (in Arabic), published when the tax started. We recalculated them.
The real estate transaction tax in Saudi Arabia reaches well beyond a plain sale. It covers several forms of transferring property or something close to it.
Residential and commercial rent falls outside the real estate transaction tax in Saudi Arabia, according to the simplified guide.
Transferring 30% or more of a real estate company's interests is taxable, whether in one deal or in a series within three years. A smaller transfer isn't taxed under the conditions in the regulations. If you're selling shares, read the official text.
The formula for the real estate transaction tax in Saudi Arabia is simple: tax = 5% × base. The base is where disputes happen. It's the agreed price, as long as that price isn't below fair market value on the date of the transaction. Fair market value is compared with similar arm's-length sales.
Inseparable elements, such as licences and rights attached to the property, are part of the base. The implied profit margin inside licensed financing, such as Murabaha, isn't.
| Case | Base (SAR) | Tax (SAR) |
|---|---|---|
| Commercial property worth 800,000 | 800,000 | 40,000 |
| Contract at 1,000,000, market value 1,500,000 | 1,500,000 | 75,000 |
| Price 1,000,000 plus 400,000 financing cost | 1,000,000 | 50,000 |
| Villa sold for 3,000,000 | 3,000,000 | 150,000 |
All four examples come from the detailed guideline. Look at the second one: writing a low price in the contract doesn't save SAR 25,000, because the tax is assessed on market value anyway.
The seller is primarily responsible for collecting and paying the real estate transaction tax in Saudi Arabia. The detailed guideline says so, and the simplified guide confirms it. But the buyer isn't fully off the hook.
The buyer becomes jointly liable if they caused the non-payment or delay. Agreeing to understate the price in the contract is one example. Wrongly claiming the first-home benefit is another.
An example from the guideline: a property is declared at SAR 1.2 million but is worth SAR 2 million. The Authority can assess the tax on SAR 2 million, which is SAR 100,000 instead of SAR 60,000. The SAR 40,000 gap is the joint liability of both parties.
In practice the parties often agree commercially on who bears the cost. That agreement doesn't change who is liable before the Authority.
The general rule is that the tax is paid before or at notarization with a notary. A deed won't be notarized until the tax is paid or an exemption is proven.
| Type of transaction | Due date |
|---|---|
| Notarized sale | Before or at notarization |
| Forced sale or court auction | Before or at notarization |
| Off-plan sale | Before or at notarization |
| Transfer of possession without ownership | Within 30 days of handing over possession |
| Transfer of shares in a real estate company | Within 30 days of the transfer or unconditional agreement, whichever is earlier |
| Usufruct over 50 years | Within 30 days of the grant |
| Unnotarized contract | Within 30 days of the earliest of the contract, agreement or ownership transfer |
| Breach of an exemption condition | Within 30 days of the breach |
So the deadlines for the real estate transaction tax in Saudi Arabia revolve around the day of notarization or a 30-day window.
The real estate transaction tax in Saudi Arabia is paid online through the Authority's service. These steps follow the simplified guide, and the service interface may have changed, so check the Authority's website.
In practice, don't wait for notarization day. Open the invoice a few days earlier so the transfer isn't delayed.
The detailed guideline compares the agreed price with similar sales between independent parties under ordinary conditions. The closer your deal is to real prices in the same neighbourhood, the lower the risk of reassessment.
As a practical step, a seller should keep evidence of the price: recent comparable sales nearby, and a valuation from an accredited valuer if the gap between the price and market talk is large. That's practical advice, not a legal requirement the guideline mentions.
The most common mistake with the real estate transaction tax in Saudi Arabia is thinking a low contract price lowers the tax. The earlier example shows the opposite: tax follows the market, and the risk falls on both parties.
The first-home relief requires the buyer to be a citizen, according to the simplified guide.
So a resident or foreign buyer who acquires property in the cases the law allows pays the real estate transaction tax in Saudi Arabia in full, at 5%, and doesn't get the State's coverage. That's an inference from the published conditions, and the detailed guideline has no separate section on foreign buyers.
For a buyer abroad, the tax still falls on the seller. But the buyer remains jointly liable if they're found to have taken part in understating the price, so they should ask for the payment invoice and reference number before the transfer.
The detailed guideline lists more than 20 exemptions from the real estate transaction tax in Saudi Arabia. Some have no strings attached. Others depend on a holding period, and breaking it loses the exemption. These are the main ones, grouped.
| Exemption | Main condition |
|---|---|
| Inheritance division among heirs | Within Sharia shares, with an inheritance certificate |
| Endowments and charities | Transfer without consideration |
| Public bodies | Purchases for their public activities |
| Expropriation for public benefit | As provided by law |
| Notarized gift to a spouse or relative up to the third degree | The recipient doesn't transfer ownership within 3 years |
| Notarized will | Execution of a notarized will |
| Collateral for a loan | The transfer is temporary and returns to the owner after repayment |
| In-kind capital contribution | Shares held for 5 years |
| Merger or acquisition for shares | Held for 5 years, with proportions kept |
| Individual transfer to a company 100% owned | Ownership unchanged for 5 years |
| Licensed developer selling off-plan | Project licence, with a 90-day window |
| Cancelled transaction | Property returned by mutual consent within 90 days, with full refund |
Many people notice the exemption and miss the holding condition. If the recipient of a gift sells the property within three years, or company ownership changes within five years, the exemption ends. The tax then falls due within 30 days of the breach.
A common slip in inheritance: the estate is divided with an inheritance certificate, then one heir takes more than their share and pays the others the difference. That difference is taxable, and so is a sale of a share to someone outside the heirs.
The guideline's own examples: a SAR 1 million gift to a cousin, who isn't within the exempt degrees, owes SAR 50,000. A sale to a relative, even a father, is fully taxable: SAR 50,000 on SAR 1 million.
The State covers the real estate transaction tax in Saudi Arabia for a citizen buying a first home, on up to SAR 1 million of the property's value. The cap used to be SAR 850,000, according to the simplified guide. Press reports (in Arabic) add that the buyer pays on the part above the cap.
Per the simplified guide, the mechanism works like this: the buyer obtains a State-coverage certificate, hands it to the seller, who pays the tax and recovers the amount from the government body. Procedures and the issuing body may have changed since the guide came out, so confirm the current process.
Secondary property sources describe practical conditions for this relief. The property is an existing building (a villa, apartment, floor or duplex), not land or a self-build. It is the first home registered in the citizen's name, and a certificate from the Ministry of Municipalities and Housing is provided.
The most the State saves you is SAR 50,000, which is 5% of one million. Confirm the current conditions before buying.
If you're weighing a villa against a townhouse, we apply this calculation to a full example in our guide to buying a townhouse in Saudi Arabia.
| Home price (SAR) | Full tax | Covered by the State | Paid by the buyer |
|---|---|---|---|
| 800,000 | 40,000 | 40,000 | 0 |
| 1,000,000 | 50,000 | 50,000 | 0 |
| 1,400,000 | 70,000 | 50,000 | 20,000 |
| 2,500,000 | 125,000 | 50,000 | 75,000 |
The table assumes the buyer qualifies. Claiming the first-home benefit without qualifying makes the buyer jointly liable, as shown above.
Take a villa in Riyadh with a market value of SAR 2.8 million. The full tax is 5%, or SAR 140,000. Who carries it depends on the case.
| Case | Base | Tax | State coverage | Remainder |
|---|---|---|---|---|
| Citizen buying a first home | 2,800,000 | 140,000 | 50,000 | 90,000 |
| Another buyer, no exemption | 2,800,000 | 140,000 | 0 | 140,000 |
| Declared price 2,000,000, market 2,800,000 | 2,800,000 | 140,000 | 0 | 140,000 |
In the third case the declared price would have produced SAR 100,000 of tax. But the Authority assesses it on SAR 2.8 million, which leaves a SAR 40,000 gap that both parties are responsible for, plus possible penalties.
The lesson: cutting the declared price to save the real estate transaction tax in Saudi Arabia ends with the same tax and extra risk.
Before you open the invoice, check these points.
Sellers in particular: whatever the real estate transaction tax in Saudi Arabia comes to, don't hand over the deed until the notary has confirmed payment or exemption.
According to PwC's summary of the new implementing regulations, most earlier exemptions stayed, with clearer treatment of transfers to public bodies. New exemptions cover mergers and acquisitions, public offerings of real estate company securities, and forced sales in liquidation.
New non-taxable cases were also added, such as the 30% share rule and subdividing land among its original owners without consideration. The Authority may now reassess transactions disclosed before the effective date within three years.
| Item | Position under the new regulations |
|---|---|
| Effective date | April 2025 |
| Rate | 5%, unchanged |
| Tax base | Now includes movable assets allocated to serve the property and related real rights |
| Real estate company shares | Transfers below 30% within three years of reaching 30% ownership are excluded |
| New exemptions | Mergers and acquisitions, public offerings of real estate company securities, forced sales in liquidation |
| Refunds | A separate process for excess or mistaken payments |
| Reassessment | The Authority may verify and reassess within three years |
| Guarantee | The Authority may require a cash or bank guarantee for unpaid tax and fines |
The table summarizes PwC's brief, so check the regulation text where it matters to you.
The parties can agree commercially who bears the amount, but that doesn't change the legally liable party before the Authority. So a contract should have an explicit clause on three points: the expected amount based on the declared price, who actually bears it, and when the payment invoice will be provided.
If the buyer claims the first-home relief, the contract should list the required certificate and say what happens if it isn't issued. These are general drafting ideas, and a licensed lawyer should review the final wording.
Published penalty figures vary by source. The 2020 simplified guide states 5% per month, while recent property sources report a late-payment penalty of 2% of the unpaid tax for each month.
The part of the detailed guideline we could read didn't include the full penalty schedule, so confirm the current figure on the Authority's website before paying the real estate transaction tax in Saudi Arabia.
Example at 2%: a SAR 1 million sale carries SAR 50,000 of tax. One month late adds SAR 1,000, three months adds SAR 3,000, and a full year adds SAR 12,000. At 5% those figures become SAR 2,500, SAR 7,500 and SAR 30,000. Evasion on this sale could cost up to SAR 150,000.
If a transaction is cancelled and the property returned by mutual consent within 90 days of notarization, with full refund of the consideration, no tax is charged. The new regulations also added a process for refunding excess or mistaken payments, as PwC's summary explains.
If the tax was paid before an exemption was established, a refund is possible. Keep the invoice, the reference number and the exemption documents.
The real estate transaction tax in Saudi Arabia is 5% of the transaction value. It's calculated on the agreed price or the fair market value, whichever is higher.
The seller is primarily liable. The buyer can be jointly liable if they caused the non-payment, for example by agreeing to understate the price or by claiming an exemption they don't qualify for.
Before or at notarization for a notarized sale. For unnotarized contracts, share transfers and long usufruct, the window is 30 days, depending on the type of transaction.
No. According to the simplified guide, residential and commercial rent isn't subject to the tax.
The full tax is SAR 70,000. The State covers SAR 50,000 on the first million, and the buyer pays SAR 20,000 on the extra 400,000, provided the first-home conditions are met.
Yes, if it's notarized and made to a spouse or a relative up to the third degree, and the recipient doesn't transfer ownership within three years. A gift to anyone else, such as a cousin, is taxable.
No. If the price is below fair market value, the tax may be assessed on market value, and both parties are jointly liable for the difference.
No. The detailed guideline says the same transaction isn't taxed under both. VAT used to apply to real estate supplies before RETT took effect.
Recent sources report 2% of the unpaid tax for each month, while the 2020 simplified guide states 5%. Check the current schedule on the Authority's website.
Yes, in documented cancellations within 90 days and for excess or mistaken payments, following the Authority's procedures.
Yes. The new regulations let the Authority verify a transaction's value and the tax paid, and reassess, within three years. Keep the invoice and your price evidence.
Three questions settle the real estate transaction tax in Saudi Arabia: what base it's calculated on, who is liable to pay, and whether an exemption applies and under what conditions. Answer them before signing, not after.
Keep the payment invoice and exemption documents for as long as you own the property, in case the Authority asks for clarification.
If you're looking for property in Riyadh, browse properties for sale and rent in Riyadh and the residential projects at Diyar Roaa.
Our guide to buying a property in Riyadh covers the rest of the purchase costs, and the real estate investment guide is the next read for investors.
If you want the full cost of a specific property worked out before you sign, contact the Diyar Roaa team through the contact page and ask them to check the numbers with you.
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