Rates, exemptions and first-home support in 2026
When buying property in Saudi Arabia, financial planning involves more than determining the purchase price or choosing a mortgage. Buyers also need to understand the taxes associated with completing a property transaction.
One of the most important considerations is Real Estate Transaction Tax (RETT), which applies at a standard rate of 5% to taxable real estate transactions. However, certain transactions qualify for exemptions, and government initiatives may cover the tax for eligible beneficiaries.
Saudi Arabia's updated Real Estate Transaction Tax Law came into effect on April 10, 2025, establishing the regulatory framework applicable in 2026.
This guide explains the Real Estate Transaction Tax rate in Saudi Arabia, how it is calculated, who is responsible for paying it, the main exemptions, and how eligible Saudi citizens can benefit from the government's first-home tax support initiative.
Real Estate Transaction Tax, commonly abbreviated as RETT, is a tax imposed on real estate transactions that fall within the scope of Saudi Arabia's tax regulations.
It is not limited to the sale of houses and apartments. Depending on the nature of the transaction, it may also apply to other forms of property ownership transfers or transfers of real estate usufruct rights.
The Zakat, Tax and Customs Authority (ZATCA) oversees the implementation of RETT, the registration of taxable real estate transactions, and the collection of applicable taxes.
The standard Real Estate Transaction Tax rate in Saudi Arabia is 5% of the taxable transaction value.
This rate applies to transactions covered by the law unless they meet the requirements for a specific exemption.
The standard tax rate does not change simply because a property is located in a different city or neighborhood.
RETT is generally calculated by multiplying the taxable real estate transaction value by 5%.
Taxable Transaction Value × 5% = Real Estate Transaction Tax
The following list provides examples:
These figures represent the calculated tax before applying any exemptions or government tax support initiatives.
It is also important to note that the taxable transaction value is determined according to the applicable regulations. An agreed purchase price may therefore be subject to review under certain circumstances.
One of the most common questions when purchasing property in Saudi Arabia is which party is responsible for paying RETT.
As a general rule, the party disposing of the property, typically the seller in a standard sale, is legally responsible for paying Real Estate Transaction Tax to ZATCA.
However, buyers and sellers may agree on different contractual arrangements regarding who bears the financial cost of the tax.
Such an agreement does not automatically transfer the seller's statutory tax liability to the buyer.
Yes. A property transaction may include contractual arrangements specifying which party bears the financial cost of RETT, subject to applicable regulations.
For this reason, the sale agreement should clearly state whether the agreed property price includes the tax or whether separate arrangements apply.
Buyers should not automatically assume that they must pay an additional 5% on top of the advertised property price.
Yes. Saudi Arabia's Real Estate Transaction Tax Law provides exemptions for certain transactions.
However, eligibility depends on the nature of the transaction and whether all applicable conditions are satisfied.
Examples of transactions that may qualify include:
Certain property transfers associated with distributing an estate may qualify for exemption under the applicable regulations.
Some transfers of property without financial consideration may qualify for exemption, depending on the relationship between the parties and the relevant legal conditions.
Specific real estate transactions involving charitable endowments, or waqf, may be subject to special exemptions under defined conditions.
Exemptions may apply to qualifying corporate restructuring transactions or property transfers between entities that meet the regulatory requirements.
These examples do not mean that every property gift, ownership transfer, or corporate transaction is automatically exempt.
The specific conditions for each exemption must be reviewed before completing the transaction.
Saudi Arabia offers a government initiative that covers Real Estate Transaction Tax on the first home of eligible Saudi citizens.
The initiative is designed to reduce the financial costs associated with purchasing a first home.
Under the initiative, the government covers the applicable RETT on up to SAR 1 million of the first home's purchase price, subject to eligibility requirements.
With RETT calculated at 5%, the maximum government contribution under this arrangement is SAR 50,000.
The following list illustrates how the support may apply:
These examples assume that the buyer and property meet all eligibility requirements and that the transaction is subject to RETT.
In the third example, tax remains payable on the portion of the property value exceeding SAR 1 million. Responsibility for that remaining amount depends on the applicable regulations and contractual arrangements.
Although the two terms are sometimes used interchangeably, they have different meanings.
Tax Exemption: A qualifying transaction is not subject to RETT when the applicable exemption conditions are satisfied.
Government Tax Support: The transaction remains taxable, but the government covers the tax for an eligible beneficiary within the approved financial limits.
Therefore, Saudi Arabia's first-home initiative does not mean that every first-home purchase is automatically exempt from Real Estate Transaction Tax.
Benefiting from the initiative requires verifying the eligibility of both the buyer and the property and completing the relevant procedures.
The main steps include:
Buyers should verify that the certificate is valid and that all submitted information is accurate before proceeding with the purchase.
In standard property sales, the transaction must generally be registered and any applicable RETT paid before completing the property ownership transfer or notarizing the contract, in accordance with the relevant procedures.
ZATCA provides an electronic service for registering real estate transactions and determining whether they are subject to RETT.
The registration process generally involves the following steps:
The exact requirements may vary depending on the type of transaction and the method used to document the ownership transfer.
Off-plan property transactions may be subject to RETT depending on the nature of the transaction and the applicable regulations.
However, the timing of the tax obligation and registration procedures may differ from those associated with completed properties.
When purchasing an off-plan residential unit, buyers should review the sale agreement and confirm when the tax becomes payable and which party is responsible for paying it.
They should also verify the project's licensing status and contractual handover conditions.
Buyers should not assume that RETT becomes payable simply because a preliminary agreement has been signed. The nature of the agreement and the applicable regulatory requirements must be considered.
Understanding Real Estate Transaction Tax in Saudi Arabia helps buyers identify their financial obligations and avoid unexpected expenses before completing a property transaction.
Although the standard tax rate is 5%, the amount ultimately payable depends on the nature of the transaction, any applicable exemptions, and eligibility for government support initiatives.
Clarifying who is responsible for the tax and reviewing the sale agreement before signing can also help ensure a more transparent purchasing process.
At ZOOD Real Estate, we believe that choosing the right home begins with understanding your housing needs and the financial and regulatory considerations associated with property ownership.
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.
