Taxes, fees and expenses to plan for
When planning to buy property in Saudi Arabia, the advertised price is often the first thing buyers consider. However, the actual cost of purchasing a property may include additional expenses such as taxes, transaction fees, mortgage financing, property valuation, and furnishing, along with ongoing financial commitments after moving in.
These costs vary depending on the property type, payment method, contractual terms, and whether the purchase is made directly from a developer or through a real estate agent.
Understanding the cost of buying property in Saudi Arabia therefore requires looking beyond the purchase price and calculating the total amount needed before and after completing the transaction.
This guide explains the main expenses associated with buying property in Saudi Arabia, including a practical example to help buyers prepare a more accurate budget.
Property purchase costs generally fall into three categories: the property's purchase price, transaction-related expenses, and costs incurred after ownership.
The following list outlines the main expenses:
Buyers are not necessarily responsible for all these expenses. Responsibility for certain costs depends on applicable regulations and the agreements between the parties involved.
The property's purchase price represents the largest part of the transaction, but it is not the only amount buyers should include in their budget.
When purchasing a property outright, buyers need sufficient funds to cover the agreed price and any additional expenses they are responsible for.
When purchasing through mortgage financing, buyers must also consider the down payment, financing amount, and monthly installments.
A larger down payment reduces the amount that needs to be financed and may affect the total cost of financing.
However, allocating most of your savings to the down payment could leave insufficient funds for furnishing, maintenance, or unexpected expenses.
It is therefore important to balance the down payment against the need to maintain an appropriate financial reserve.
Real Estate Transaction Tax (RETT) is one of the most important costs to review when purchasing property in Saudi Arabia.
The standard rate is 5% of the value of a taxable real estate transaction, subject to the applicable regulations and exemptions.
For a property valued at SAR 1,000,000, the tax would be calculated as follows:
SAR 1,000,000 × 5% = SAR 50,000
This calculation illustrates the tax amount. It does not necessarily mean that the buyer must pay an additional SAR 50,000.
Under the applicable regulations, the party disposing of the property is generally responsible for the tax. Any contractual arrangements concerning who bears its cost should be reviewed carefully.
Certain transactions may also qualify for exemptions or special provisions.
Saudi Arabia offers a government initiative covering Real Estate Transaction Tax on the first home of eligible Saudi citizens, subject to the approved conditions and financial limits.
Under this initiative, the government covers the applicable tax on up to SAR 1 million of the first home's purchase price, provided the eligibility requirements are met.
Purchasing a home for the first time does not automatically qualify a buyer for this benefit. Both the buyer's eligibility and the property's qualification must be verified, and the required procedures must be completed.
Some property transactions involve a licensed real estate agent who assists with property listings, negotiations, and completing the sale.
Under Saudi Arabia's Real Estate Brokerage Law, the standard commission for property sales is 2.5% of the transaction value, unless the parties to the brokerage agreement agree otherwise in writing.
The party that contracts with the real estate agent is responsible for paying the commission under the brokerage agreement.
Therefore, buyers should not assume that they are responsible for the commission in every property transaction.
For example, on a property valued at SAR 1,000,000, a commission of 2.5% would equal:
SAR 1,000,000 × 2.5% = SAR 25,000
Before proceeding, buyers should confirm that a clear brokerage agreement is in place, verify the agent's license, and identify the agreed commission and the party responsible for paying it.
When purchasing a property through mortgage financing, financing costs become an essential part of the overall budget.
These costs extend beyond monthly installments and may include financing charges and other fees associated with the agreement.
Administrative Fees
Under the Saudi Central Bank's applicable rules, administrative fees and costs are capped at 1% of the financing amount or SAR 5,000, whichever is lower, excluding government taxes.
Annual Percentage Rate (APR)
The APR helps borrowers compare financing offers by expressing the annual cost of financing according to the prescribed calculation method.
Total Financing Cost
Buyers should review the total amount payable under the financing agreement rather than focusing exclusively on monthly installments.
Early Repayment Conditions
Mortgage agreements should also be reviewed for any obligations that may apply when financing is settled before the scheduled end date.
Before making a decision, buyers should request a financing offer that clearly outlines the down payment, applicable fees, APR, and total amount payable.
Buying property may involve obtaining a professional valuation to determine its value, particularly when mortgage financing is required.
Buyers may also choose to commission an independent technical inspection to assess the property's condition before completing the transaction.
Property Valuation: Estimates the property's value according to applicable professional standards.
Technical Inspection: Examines the building's condition, finishes, electrical and mechanical systems, and any visible or potential defects.
Costs vary depending on the service and provider.
When mortgage financing is involved, buyers should review which charges the financing provider is permitted to collect. Valuation and registration costs should not automatically be treated as separate charges in addition to regulated administrative fees.
Even a move-in-ready residential unit may require additional preparation before it can be occupied.
Potential expenses include:
These costs can vary significantly depending on the property's condition and the finishes and fixtures included in the purchase agreement.
Reviewing the agreed specifications before allocating a furnishing budget can help avoid unexpected expenses.
Financial responsibilities do not end once property ownership has been registered.
Homeowners may face recurring expenses related to maintenance, utilities, and shared facilities.
In integrated residential developments, these costs may include maintaining entrances and elevators, managing communal areas, and operating shared amenities.
Before purchasing, buyers should review the applicable service charges, how they are calculated, and who is responsible for managing the facilities.
It is also advisable to allocate a regular maintenance budget, particularly for properties that require ongoing upkeep of building systems and equipment.
Consider a buyer purchasing an apartment for SAR 1,000,000, using mortgage financing that covers 80% of the purchase price.
In this example, the buyer makes a 20% down payment and is assumed to be responsible for the real estate agent's commission.
This example assumes that the buyer is not responsible for Real Estate Transaction Tax and that no other transaction-related expenses are payable by the buyer.
The SAR 30,000 furnishing allowance is an illustrative budget, not an established average furnishing cost.
The total also excludes financing costs over the repayment period, recurring maintenance and service charges, and any additional expenses that may apply.
Note: The down payment and mortgage financing are components of the property's purchase price, not additional fees. The example illustrates the initial cash required rather than the property's total long-term ownership cost.
Planning ahead can help buyers identify financial obligations before signing a purchase agreement.
Recommended steps include:
This approach allows buyers to compare properties based on their actual costs rather than advertised prices alone.
Not necessarily. Additional fees and expenses may apply depending on the payment method and contractual terms. Buyers should request written confirmation of what is included in the advertised price.
Real Estate Transaction Tax is generally 5% of the taxable transaction value, subject to applicable exemptions and special provisions. The buyer is not necessarily responsible for paying it.
No. The commission is payable by the party that contracts with the agent under the brokerage agreement. The standard rate is 2.5% of the sale value unless otherwise agreed in writing.
Mortgage financing may increase the total amount paid because of financing charges and associated fees. Buyers should therefore review the total financing cost rather than focusing only on monthly installments.
When buying property in Saudi Arabia, setting a budget based solely on the purchase price may not provide a complete picture of the financial commitment.
Accounting for taxes, transaction fees, financing costs, furnishing, and maintenance helps buyers better understand the expenses associated with property ownership.
Reviewing these costs early also makes it easier to compare residential options according to individual needs and financial circumstances.
At ZOOD Real Estate, we focus on developing residential communities that combine thoughtful planning, design, and services that support everyday living.
Through developments such as ÉLEVÉE in Al Nakheel and La Vie Yard in Al Sahafah, ZOOD offers residential options in Riyadh that bring together living spaces, surrounding services, and an integrated residential experience.
