Saudi Arabia's 5% property sales tax falls on the seller

Since 10 April 2025, every Saudi property sale carries a 5% tax on its value, and the seller owes it. No deed is notarised until the tax is paid or an exemption is shown (RETT Law, Royal Decree M/84, Umm Al-Qura). Non-Saudi sellers in the main cities now pay a further 2%. Most coverage still quotes a 10% total for foreigners, which was only ever a ceiling (Umm Al-Qura).

Key figures at a glance

Metric	Value	Scope	As of	Source
RETT rate	5% of the transaction value, never below fair market value	All Saudi real estate	Law in force 10 Apr 2025	Umm Al-Qura
Person liable	The assignor (seller); the buyer joins only where ZATCA proves he caused the non-payment	National	Law in force 10 Apr 2025	Umm Al-Qura
Statutory exemptions	21 categories in Article 3(a); the Council of Ministers may add more	National	Law in force 10 Apr 2025	Umm Al-Qura
Share-deal threshold	30% or more of a real estate company, in one deal or a series inside any 3 years	National	Regulation in force 10 Apr 2025	ZATCA
First-home relief	State bears the tax up to SAR 1,000,000; 5% on any excess	Saudi citizens' first dwelling	Guideline V6, May 2026	ZATCA
Late-payment fine	2% of the unpaid tax per month or part month, capped at 50%, plus 1% on an amended assessment	National	Law in force 10 Apr 2025	Umm Al-Qura
Non-Saudi disposal fee	2% of the value, against a statutory ceiling of 5%; zero outside the four named scopes	Riyadh, Makkah and Madinah cities, Jeddah governorate	Gazetted 3 Jul 2026	Umm Al-Qura
VAT position	Property sales exempt from VAT; a commercial lease under 50 years still carries 15%	National	ZATCA guide dated 3 May 2024	ZATCA
RETT collections	Not published, at any frequency, for any year	National	FY2026 budget statement	MoF

What the 5% is charged on

Article 2(1) taxes any disposal at 5%, whatever the property's state or use. That covers finished buildings, units under construction, off-plan sales and partial interests, notarised or not.

The base is the agreed price, as long as it is not below fair market value. Example (8) of ZATCA's Detailed Guideline, Version 6, May 2026 shows a related-party sale at SAR 1,000,000 taxed on its SAR 1,500,000 valuation.

A transfer of benefit beyond 50 years is taxable in itself. Example (10) of the same guideline takes a 60-year usufruct contracted at SAR 100,000 a year and values it at SAR 200,000 a year. The taxable base becomes SAR 12,000,000. The tax, due at notarisation, is SAR 600,000. ZATCA calls that figure a present value but discounts nothing. A model that discounts the payments will therefore set aside too little.

Share deals are caught too. A company counts as a real estate company when Saudi property makes up at least 50% of its assets at fair market value, on the transfer date or at any point in the 365 days before (Implementing Regulation, Article 2, in force 10 April 2025). Selling the property down first does not help. Nor does selling in small slices, because the 30% threshold counts across any three years.

Sales carry no VAT. Item Sixth of Royal Decree M/84 exempts them from the 15% tax. A commercial lease under 50 years is the other way round: VAT applies and RETT does not (the boundary, case by case).

Who pays the tax

The seller. Article 7(1) of the Law makes the assignor liable. The buyer becomes jointly liable only if ZATCA shows he caused the non-payment.

The tax is due on the transaction date, which the Law treats as the notarisation date. Where nothing is notarised, as with a possession transfer or a share deal, the seller has 30 days (Detailed Guideline, section 4.3, Version 6, May 2026).

A contract can move the cost but not the liability. FAQ 11 of the guideline says the seller may "agree with the Assignee to the contrary" and still answers to ZATCA. In practice many Saudi sale agreements push the 5% on to the buyer. ZATCA still pursues the seller, and the late-payment fine is 2% a month, down from 5% (Annual Report 2025).

What is exempt

Article 3(a) of the Law lists 21 exempt categories. They include estate division, endowments and a sale cancelled within 90 days. Article 3(b) allows the Council of Ministers to add more.

Advisers often say 24. That is because the Version 6 guideline numbers its exemption sections 5.1.1 to 5.1.24. Three of those sections are transitional reliefs from the Royal Decree (category by category).

Gifts to a relative "up to the third degree" are still exempt, but the degrees now cover different people. The 2022 amendment put grandparents in the first degree and included a great-nephew in the third (Umm Al-Qura). The current Implementing Regulation and guideline section 5.1.7 move grandparents to the second degree, add uncles and aunts, and drop the great-nephew.

The State pays the tax on a first home

The buyer gets a First Home certificate from the Ministry of Municipalities and Housing and passes it to the seller, who registers the sale with ZATCA. The State then pays the tax on the first SAR 1,000,000 of the price, and 5% applies above that (Detailed Guideline, section 6, Version 6, May 2026). The ceiling was SAR 850,000 under VAT and rose to SAR 1,000,000 when RETT replaced it in October 2020 (section 1.1).

The relief is not in the Law or its Regulation. Neither text mentions a dwelling, a citizen or a riyal ceiling for it. The relief sits in a Royal Order, so its ceiling can change without amending the statute.

The ministry's own page still calls it "VAT for the first home" at its 12 June 2026 revision (MOMRAH), nearly six years after property sales left VAT.

What a non-Saudi pays after the 3 July 2026 regulation

In July 2025 REGA described "a total real estate fee ... of 10%": the 5% tax plus a fee "not exceeding 5%" (REGA Q&A). That 5% was a ceiling, set in Article 9 of the Non-Saudi Ownership Law, in force since 22 January 2026. Most English coverage still repeats it.

The actual rate came a year later. The Implementing Regulation, approved by Council of Ministers Resolution No. 43 and gazetted on 3 July 2026, sets the fee at 2% for all rights and uses (Umm Al-Qura). It applies in Riyadh, Makkah and Madinah cities and in Jeddah governorate. Article 10 sets it at zero everywhere else.

The fee is charged when a non-Saudi sells, not when he buys. REGA's own heading speaks of the fee on disposition "by Non-Saudi". So in those four markets a non-Saudi seller faces 5% plus 2% on exit, and a model that books either charge as a buyer's entry cost has it on the wrong side.

Where foreigners may own is set by a separate Council of Ministers decision. The Geographical Zones Document promised for the first quarter of 2026 had not been published at this data cut, and Makkah and Madinah keep their own rule, limited to Muslim natural persons.

What the published record does not show

No one publishes what the tax collects. The FY2026 budget statement reports tax revenue in four broad lines and never names RETT (MoF). ZATCA's Annual Report for 2025 discusses the tax but gives no collections figure. The share of exempt transactions, which would give an effective rate, is not published either.

What is measured each quarter is price. GASTAT's index draws on the same notarised sales the tax is levied on, and it was up 1.3% year on year in Q2 2026 (GASTAT).

Omran estimate. Applying 5% to REGA's Q1 2026 land and apartment sales gives about SAR 1.45 billion for the quarter. That is an upper limit on part of the base. Villas and commercial property are outside it, and exemptions and the first-home relief reduce the real figure by an unknown amount. REGA's figures are reported by AGBI, 16 July 2026.

Segment, Q1 2026	Transactions	Value	5% of value
Land	21,320	SAR 20.71 billion	about SAR 1.04 billion
Apartments	12,650	SAR 8.34 billion	about SAR 0.42 billion

Nothing published links that quarter's fall in land sales to RETT. The rate has been 5% since October 2020, and the 2025 law only restated it, so the rate cannot explain a change (the white land tax is a separate levy).

One gap matters for due diligence. Article 13(1) of the non-Saudi law required its regulation within 180 days of publication on 25 July 2025. It arrived on 3 July 2026, while the Law had been in force since 22 January 2026, and nothing published says how disposals in between were treated.

Ask us to scope the tax line in your acquisition model.

FAQ

What is the real estate transaction tax in Saudi Arabia, and what rate is it now? A 5% tax on any transfer of real estate, or of a permanent benefit in it, in force since 10 April 2025 under Royal Decree M/84. Every disposal is in scope unless one of the 21 exemptions catches it.

Who pays RETT, the buyer or the seller, and can that be contracted around? The seller. Article 7(1) makes the assignor liable, and the buyer joins only where ZATCA establishes that he caused the non-payment. ZATCA's guideline lets the seller "agree with the Assignee to the contrary", but ZATCA still pursues the seller if the tax goes unpaid.

Do foreigners pay 10% on Saudi property? No. The schedule gazetted on 3 July 2026 set the extra fee at 2% in Riyadh, Makkah and Madinah cities and Jeddah governorate, and zero elsewhere. The 10% was REGA's July 2025 statement of a ceiling, and both charges fall on the disposing party.

How does the first-home relief work above SAR 1,000,000? The State bears the tax on the first SAR 1,000,000 and 5% is charged on the excess, so a first home bought at SAR 1,300,000 leaves SAR 300,000 in the base and SAR 15,000 of tax. It is not a statutory exemption, and a certificate that proves incorrect makes the buyer jointly liable with the seller.

Does buying shares in a company that owns Saudi real estate trigger RETT? Once 30% or more of the interests move, in one deal or a series inside any three-year period, yes. The entity counts as a real estate company when Saudi property is at least 50% of its assets at fair market value, tested on the transfer date or at any point in the 365 days before it. Both rules are in the Implementing Regulation in force since 10 April 2025.

Sources

Umm Al-Qura official gazette, RETT Law (rate, base, liability, timing, 21 exemptions, penalties, assessment window): link
Umm Al-Qura, Royal Decree M/84 (approval, VAT exemption for RETT supplies, transitional reliefs, regularisation window): link
Umm Al-Qura, 2022 amendment to the former regulation (the earlier definition of the third degree): link
ZATCA, Detailed Guideline for RETT, Version 6, May 2026 (worked examples, exemption sections, 30-day table, first-home mechanism, SAR 850,000 predecessor ceiling, FAQs): link
ZATCA, Implementing Regulation of the RETT Law, Arabic (real estate company test, 30% threshold, no first-home wording): link
ZATCA, Simplified Guideline, Fifth Version, 3 May 2024 (the VAT against RETT comparison table): link
ZATCA, Annual Report 2025 (late-payment fine cut from 5% to 2%, no collections figure): link
Umm Al-Qura, Law of Real Estate Ownership by Non-Saudis (Article 9 fee ceiling, Makkah and Madinah restriction, penalties): link
Umm Al-Qura, its Implementing Regulation (2% fee table, four scopes, ten zero-rated cases, penalty annex): link
Umm Al-Qura, Council of Ministers Resolution No. 43 (approving that regulation): link
REGA, Q&A on the updated non-Saudi ownership law (the July 2025 "total 10%" statement): link
REGA news release, 22 January 2026 (entry into force; Geographical Zones Document promised for Q1 2026): link
GASTAT, Real Estate Price Index Q2 2026 (general index +1.3% year on year; methodology built with the Ministry of Justice): link
Ministry of Finance, Budget Statement FY2026 (no RETT revenue line): link
MOMRAH, first-home initiative page still labelled VAT at its 12 June 2026 revision: link
REGA transaction data for Q1 2026, as reported by AGBI, 16 July 2026: link