Real Estate Transaction Tax Saudi Arabia: 5%, Seller Pays

The real estate transaction tax Saudi Arabia has charged since 10 April 2025 is 5% of the disposal value, it is the seller's liability, and no deed is notarised until it is paid or an exemption proved (RETT Law, issued by Royal Decree M/84, Umm Al-Qura). Article 3(a) exempts 21 categories and the State bears the tax on a citizen's first SAR 1,000,000. The most misquoted number is the non-Saudi one: the regulation gazetted on 3 July 2026 fixed the extra fee at 2%, not the 5% ceiling still in circulation, and only in Riyadh, Makkah and Madinah cities and Jeddah governorate (Umm Al-Qura). It is zero elsewhere, and both charges fall on the seller.

Key figures at a glance

What the 5% is charged on

Article 2(1) taxes the disposal at 5% whatever the property's condition, form or use: whole or part, finished, under construction or off plan, notarised or not. The base is the agreed price provided it is not below fair market value, and Example (8) of ZATCA's Detailed Guideline, Version 6, May 2026 taxes a SAR 1,000,000 related-party sale on its SAR 1,500,000 valuation.

The long lease is what catches modellers. A transfer of benefit beyond 50 years is taxable in itself, and Example (10) of the same guideline values a 60-year usufruct contracted at SAR 100,000 a year at SAR 200,000 a year, taxing SAR 12,000,000 rather than SAR 6,000,000 of nominal rent. Five per cent of that base is SAR 600,000, payable at notarisation. ZATCA calls the SAR 12,000,000 a present value and discounts nothing, so a properly discounted model under-provisions it.

Share deals are in the net, and the test looks backwards: a company counts as a real estate company when Saudi property is at least 50% of its assets at fair market value, measured when the interest moves or at any point in the preceding 365 days (Implementing Regulation, Article 2, in force 10 April 2025). Selling the property down first does not clear it, and nor does a drip feed, since the 30% threshold runs across any three years.

Sales carry no VAT, since item Sixth of Royal Decree M/84 exempts RETT supplies from the 15% tax, while a commercial lease under 50 years still carries VAT and no RETT (the boundary, case by case).

Who pays the real estate transaction tax Saudi Arabia levies

The assignor pays. Article 7(1) of the Law makes the seller liable, and the buyer joins as a joint debtor only where ZATCA establishes that he caused the non-payment. The tax falls due on the date of the transaction, deemed by the Law to be the date of notarisation, and nothing is notarised before it is paid. Where there is nothing to notarise, on a possession transfer or a share deal, the clock is 30 days (Detailed Guideline, section 4.3, Version 6, May 2026).

A contract moves the money, not the liability. ZATCA says so in FAQ 11 of that same guideline: the seller files and pays, "and they have the right to agree with the Assignee to the contrary", while remaining responsible to the Authority. In practice Saudi sale agreements push the 5% on to the buyer. ZATCA pursues the seller anyway, and charges 2% a month on late payment, a fine it cut from 5% (Annual Report 2025).

What is exempt: 21 categories in the Law, 24 sections in the guideline

Article 3(a) of the Law lists exactly 21 exempt categories, counted item by item in the gazetted Arabic: estate division, endowments, expropriation, court-ordered sales, mergers, notarised family gifts and a sale cancelled inside 90 days among them. Article 3(b) leaves it open to more.

Advisers write 24, because the Version 6 guideline numbers its exemption sections 5.1.1 to 5.1.24. Three of those are transitional reliefs from the Royal Decree's issuing instrument rather than Article 3, and 24 less 3 is the Law's 21 (category by category).

The subtler risk is a defined term that changed under a name that did not. Gifts to a relative "up to the third degree" are still exempt, but the degrees are different people. The 2022 amendment put grandparents in the first degree and reached a great-nephew in the third (Umm Al-Qura); the current Implementing Regulation and guideline section 5.1.7 move grandparents to the second, bring in uncles and aunts, and leave the great-nephew out.

The first-home relief is the State paying, not an exemption

The buyer takes a First Home certificate from the Ministry of Municipalities and Housing portal to the seller, who registers the sale on ZATCA's RETT service. The State then bears the tax up to SAR 1,000,000 of the price, with 5% charged above (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, a step the same guideline records at section 1.1.

Calling it an exemption is wrong. Normalise the Arabic of that Regulation and search for dwelling, citizen, Saudi or riyal: zero hits on all four, and the Law's only "riyal" is the SAR 50,000 fine ceiling in Article 15(3). The relief lives in a Royal Order, so its ceiling moves without amending the statute.

MOMRAH's own page for it is titled "VAT for the first home" and still says the State bears value added tax on up to SAR 1,000,000, at the 12 June 2026 revision date the page prints (MOMRAH), nearly six years after property sales left the VAT net.

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

REGA said in July 2025 that the new ownership law carried "a total real estate fee ... of 10%", the 5% disposition tax plus a fee "not exceeding 5%" (REGA Q&A). That was a ceiling, in Article 9 of the Non-Saudi Ownership Law, in force since 22 January 2026, and it is still the figure quoted in most English coverage.

The schedule arrived a year later. The Implementing Regulation, approved by Council of Ministers Resolution No. 43 and gazetted on 3 July 2026, sets that fee at 2%, for all in-rem rights and all uses, in four scopes: the cities of Riyadh, Makkah and Madinah, and Jeddah governorate (Umm Al-Qura). Article 10 zero-rates every disposal outside them.

Which side of the trade carries the charge is what summaries get backwards. RETT falls on the assignor, and the Article 9 fee on the value of the non-Saudi's own disposal: REGA's own heading reads "What Is the Amount of the Fee on Real Estate Disposition by Non-Saudi", and Article 10 zero-rates a non-Saudi developer's sale of the units it built, which only makes sense if the fee event is a sale. So 5% plus 2% is an exit cost in four markets, priced into what a seller will accept, and zero across the rest of the Kingdom. Underwrite it as a buyer's entry ticket and both charges sit on the wrong side of the model.

Read that table as a fee schedule, not the ownership map. Geographic scope belongs to a separate Council of Ministers decision, the Geographical Zones Document promised for the first quarter of 2026 is not found published as at this data cut, and Makkah and Madinah keep their own test, confined to Muslim natural persons.

What the record does not measure

Nobody publishes what this tax collects. The FY2026 budget statement reports tax revenue in four aggregate lines and names RETT nowhere in the document (MoF), and ZATCA's Annual Report for 2025 returns to the tax repeatedly without ever attaching a collections figure to it. Nor does anyone publish how many transactions are exempt, the one figure that would turn the 5% headline into an effective rate.

The registered flow stopped being reported in early 2022. ZATCA published more than 543,000 transactions registered since 4 October 2020, in a release dated 3 August 2021, and 568,671 sales, framed as 2021, on 16 January 2022. Do not difference the pair into a growth rate: Madinah is 18,557 in the first release and 18,061 in the second, and a cumulative counter does not fall. What is measured quarterly is the price of the base, which GASTAT indexes on the same notarised flow the tax rides, up 1.3% year on year in Q2 2026 (GASTAT).

Omran estimate: a gross ceiling on part of the base, not a revenue figure. REGA's Q1 2026 prints show 21,320 land transactions worth SAR 20.71 billion and 12,650 apartment transactions worth SAR 8.34 billion (REGA data reported by AGBI, 16 July 2026; the source does not state that series' geographic coverage, so neither do we). The 5% headline on those two lines is roughly SAR 1.04 billion and SAR 0.42 billion, about SAR 1.45 billion for the quarter. That is a ceiling on two asset classes, never tax collected: villas and commercial sit outside it, and the exemptions and the first-home relief push the realised number down by an unpublished amount. Nothing published ties that quarter's fall in land sales to RETT, and the 5% has not moved since October 2020: a constant cannot explain a change (the white land tax is a separate levy on a separate base).

Omran estimate: when the amnesty for unnotarised transfers ran out. Royal Decree M/84 gave holders of pre-2020 unnotarised transfers one Hijri year from the Law's entry into force, 12 Shawwal 1446, to regularise them. It states that period in Hijri years and nobody publishes a Gregorian equivalent or an extension, so the conversion is ours: one Hijri year from 10 April 2025 falls on 12 Shawwal 1447, the very end of March 2026. Treat a legacy transfer as outside the window unless the Council of Ministers extended it.

One date belongs in diligence. Article 13(1) of the non-Saudi law required its regulation within 180 days of publication on 25 July 2025; it came on 3 July 2026, with the Law in force since 22 January 2026, and nothing published says how disposals in that gap were treated.

Most published commentary on this tax fills that gap with assertion. Omran builds its Gulf policy and transaction datasets from gazette text and regulator filings, and carries the instrument and its date on every line. 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": a contract moves the burden, never the liability.

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
• ZATCA news release, 3 August 2021 (543,000+ transactions registered since 4 October 2020): link
• ZATCA news release, 16 January 2022 (568,671 sales through the RETT service): 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