Real Estate Transaction Tax in Saudi Arabia: Full Guide | Hespah LLC [Skip to main content](#main-content)[![Hespah LLC](https://centralcdn.hespah.com/home_logolight_file2png.webp)](/en)Search More [Home](/en) [Learning Hub](/en/courses) [About us](https://hespah.com/who-we-are) [Blog](/en/blog) [Contact Us](/en/contact) Login[New Account](/en/register) 1. [Home](/en) / 2. [Blog](/en/blog) / 3. Real Estate Transaction Tax in Saudi Arabia: Scope and Exemptions Real Estate Transaction Tax in Saudi Arabia: Scope and Exemptions ================================================================= 2026-10-04 / 3 weeks ago One seller paid 5% of his land before the transfer. His neighbour, who ended a co-ownership through two deeds, paid nothing. Both moved ownership at the notary, yet classification separates them: the second never entered the real estate transaction tax. What is the real estate transaction tax? ---------------------------------------- The real estate transaction tax applies at 5% to any disposal transferring ownership of a property, or its benefit permanently. Royal Decree No. (M/84) dated 19 Rabi al-Awwal 1446H issued the law, effective 12 Shawwal 1446H, matching 10 April 2025. The agreed value forms the base, within fair market value. Application began earlier. Royal Order No. (A/84) dated 14 Safar 1442H announced the tax, in force from 4 October 2020, when the Kingdom exempted property from value added tax instead of charging 15%. Board Resolution No. (01-03-25) dated 24 Ramadan 1446H then issued today's regulations, replacing Ministerial Resolution No. (712), 15 Safar 1442H. The real estate transaction tax reaches beyond a sale ----------------------------------------------------- Article One settles it, since a disposal covers any act transferring ownership, or benefit permanently whether directly or indirectly, or benefit beyond 50 years. Consequently the real estate transaction tax catches deals their parties never call a sale: Case Treatment Basis Sale of a property Taxable at 5% whatever its condition or use Article Two — law Off-plan or under construction Taxable, notarised or not Article Two of the law Finance leases and lease-to-own Taxable once, on the disposal to the licensed financier Article Two — regulations Usufruct beyond 50 years Taxable on the present value of its market value Article Two of the regulations Transfer of 30% or more of a property company Taxable on the properties times the stake moved Article Two of the regulations A will In scope, though a notarised Sharia will is exempt Article Three — law Value stretches past land and buildings. Permits, rights in rem, and every movable serving the property permanently count too. The law nevertheless carves out the deferred-payment cost in licensed financing. ![What falls within the scope of Saudi real estate transaction tax](https://centralcdn.hespah.com/uploads/emils/17911363570.jpeg "What falls within the scope of Saudi real estate transaction tax") Out of scope versus exempt under the real estate transaction tax ---------------------------------------------------------------- This confusion costs real money. A case outside the scope never amounts to a disposal, whereas an exempt case is a disposal the text later relieved on conditions. Therefore the difference reaches your wallet through three points: registration, time restrictions, and breaches. Criterion Out of scope Exempt by text Legal basis No disposal arises The disposal arises, then the text relieves it Examples Partitioning at the same ratios · dividing co-ownership free of charge · moving under 30% of a property company Dividing an estate · a notarised gift · a disposal to a public body · mergers · a sale to a licensed developer Registration with ZATCA No event to register Mandatory, or the Ministry of Justice refuses the deed Time restrictions None, beyond the share and capital conditions Five years usually · three for a gift · 90 days to cancel Effect of a breach None Tax falls due from the disposal that failed That last line carries the danger, because Article Four pushes the due date back to the original disposal, not the breach. Article Eight likewise blocks anyone pleading time, since the three-year verification windows never limit ZATCA once a taxpayer breaks the restrictions. Today's exemption is a conditional loan. Real estate companies: when selling a stake sells a property ------------------------------------------------------------ Companies that never sold a square metre get caught here. A real estate company means any company, fund or entity — whatever its purpose — holding property in the Kingdom to earn income by sale or lease, once it reaches 50% of total assets. Three restrictions govern: 1. **The measurement window.** Firstly the ratio applies on the date the stake moves, or at any point in the 365 days before. Therefore dressing the balance sheet on deal day achieves nothing. 2. **The thirty percent threshold.** Secondly a disposal arises once a person, or a group acting in concert, moves 30% or more through related disposals in any three-year period. 3. **Below the threshold.** Thirdly it stays out of scope. For example a 9% transfer escapes, whereas selling 5%, then 10%, then 20% across three years falls in because the total hits 35%. Payment departs from the rule here, falling due within 30 days of the share transfer or of an unconditional agreement, whichever comes first. These deals carry a tangled zakat footprint, so [read our zakat versus income tax guide](https://hespah.com/en/blog/zakat-vs-income-tax-saudi). Real estate transaction tax exemptions: twenty-one conditional cases -------------------------------------------------------------------- Article Three lists 21 full exemptions, and the regulations set the controls for each. Six come up most often: 1. **Dividing an estate.** However an heir selling after the division — or heirs selling before it — pays. 2. **A notarised gift** to a spouse or relative up to the third degree. It falls away if the recipient re-gifts to someone unqualified within three years. 3. **A gift to an endowment**, public, private or joint, provided the endowment authorities register and supervise it. 4. **A transfer to a public body** or public-benefit project, and likewise expropriation. 5. **Mergers and acquisitions** between legal persons, provided the consideration is shares held five years. 6. **A transfer to a licensed developer** for off-plan activity. Without a licence yet, the discloser gets 90 days to submit it, against payment or an equal guarantee. No exemption arrives automatically, because proving it means registering the disposal and holding ZATCA's notice before transfer. When the real estate transaction tax falls due ---------------------------------------------- The rule runs simply, since the real estate transaction tax falls due on the date of the disposal, which means the notarisation date. Payment follows the same day, though parties may pay earlier. Without notarisation, Article Four takes the earlier of an unconditional agreement or an actual transfer. Then come the exceptions: 30 days on a share transfer, 30 days from breaching an exemption condition, and 30 days from an unnotarised disposal. Off-plan sales instead pay on or before notarisation. The notary holds no flexibility, because Article Nineteen bars anyone with notarisation authority from documenting a disposal whose tax remains unpaid. The transfer itself is the collection gate. ![Payment deadlines and the four penalties under the Saudi RETT law](https://centralcdn.hespah.com/uploads/emils/17911363571.jpeg "Payment deadlines and the four penalties under the Saudi RETT law") Real estate transaction tax penalties ------------------------------------- Article Fifteen sets out four penalties, and accordingly they escalate: Violation Penalty Starts from Late payment 2% of the unpaid tax per month or part, capped at 50% Day after the payment period ends ZATCA amends the tax due A further 1% per month or part 30 days after the amendment notice Breaching any other provision The tax due or SAR 50,000, whichever is greater Date of the violation Tax evasion Up to three times the evaded tax, reaching facilitators Date evasion arises Liability rests first on the discloser. The recipient, meanwhile, carries joint liability once ZATCA proves he caused the shortfall, for instance by joining an arrangement that cuts or delays it. The same logic drives [VAT penalties](https://hespah.com/en/blog/vat-penalties-saudi-arabia), where repetition inflates the figures. Disposals struck before 10 April 2025 follow a separate calculation, since the late-payment penalty runs at 5% monthly to that date and 2% afterwards. Where penalties already passed 50%, the total stands and stops accruing. The million riyals the state covers on a first home --------------------------------------------------- First-time buyers overlook this most often. The amount the state covers of the real estate transaction tax for Saudi citizens, out of a first home's price, reaches SAR 1,000,000, up from SAR 850,000 under value added tax. A first home therefore escapes the burden to that ceiling, though registration still applies. Three steps before any transfer ------------------------------- 1. **Register the disposal first.** Registration on ZATCA's portal falls due on the date of the disposal or before, and it counts as the discloser's declaration. So check the description and value first. 2. **Benchmark against the market, not the contract.** ZATCA may verify the value within three years, appoint an accredited valuer, and recompute once it finds the disclosure below market value. 3. **Watch the refund window.** You must file within 12 months of the due date, and ZATCA must decide within 30 days, otherwise the request counts as rejected. Frequently asked questions about the real estate transaction tax ---------------------------------------------------------------- ### Who pays the real estate transaction tax, the seller or the buyer? The discloser — the seller — owes the real estate transaction tax. However the buyer picks up joint liability once ZATCA proves he caused the failure. ### Does the tax apply to inherited property? It does not apply to dividing an estate by lawful shares. But it applies when an heir sells after the division, and likewise when heirs sell beforehand to split the proceeds. ### What happens if the sale collapses after payment? Returning the property to its former owner is exempt where the parties cancel by consent within 90 days, provided the description never changed and the full value goes back. ZATCA refunds the tax. ### Do VAT and the real estate transaction tax apply together? No. The Kingdom exempted property from value added tax in exchange for the 5% charge. To separate exemption from zero-rating, [read this article](https://hespah.com/en/blog/zero-rated-vs-exempt-vat). ### How long do I have to object to a ZATCA decision? You may file a grievance within 60 days of notification, and ZATCA must rule within 90 days. If it refuses or the period lapses, appeal to the competent judicial body within 30 days. Sources ------- - [The Real Estate Transaction Tax Law](https://zatca.gov.sa/ar/RulesRegulations/Taxes/Documents/RETTrgulations.pdf) — ZATCA, Royal Decree No. (M/84). - [Implementing Regulations](https://zatca.gov.sa/ar/RulesRegulations/Taxes/Documents/New%20Rett%20Regulation.pdf) — Board Resolution No. (01-03-25), 24 Ramadan 1446H. - [Simplified Guideline](https://zatca.gov.sa/ar/HelpCenter/guidelines/Documents/Simplified-Guideline-for-RETT-under-RETT-Provisions.PDF) — ZATCA, sixth edition, May 2026. 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