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May 15, 2026

This ZATCA guide clarifies the implementation of the KSA Real Estate Transactions Tax (RETT), effective from 4 October 2020. Introduced by Royal Decree No. A/84, this 5% tax replaced the 15% VAT on real estate sales to support citizens and developers. The document outlines the scope of taxable transactions, including sales, bequests, and long-term usufruct contracts exceeding 50 years. It provides detailed comparisons between the previous VAT rules and the current RETT system, and lists numerous exemptions, such as gifts to relatives and transfers for public benefit, alongside rules for violations and fines.

Simplified Guideline Real Estate Transactions Tax

Fifth Version | 3 May 2024

1. What is the Real Estate Transactions Tax?

2. Difference Between the Value-Added Tax (VAT) and Real Estate Transactions Tax (RETT)

3. VAT: Before and After

4. Real Estate Transactions Subject to Real Estate Transactions Tax

5. Exceptions from Real Estate Transactions Tax

6. Violations and Fines

7. Mechanism of Objection to the Real Estate Transactions Tax

The Zakat, Tax and Customs Authority issued this guide to clarify some matters relevant to the implementation of regulatory provisions applicable on the day of its issuance. The content of this guide is not considered an amendment to any of the provisions of regulations and bylaws in effect in the Kingdom.

The authority asserts that it applies the illustrative treatments stated in this guide, where applicable, in light of relevant regulatory texts. In the event that any clarification or content stated in this guide relevant to a non-amended regulatory text is amended, the updated illustrative treatment shall be applied to transactions that are carried out after the date of publishing the updated version of this guide on the authority‘s website.

What is the Real Estate Transactions Tax?

Real estate transactions tax, which was announced as per Royal Decree No. (A/84), dated 14 Safar, 1442 A.H., with the aim of supporting citizens and licensed real estate developers, started to be applied on Sunday, 17 Safar, 1442 A.H. In accordance with the Royal Decree and executive decisions, the sale of real estate is exempted from value-added tax, instead of imposing it at a rate of 15%, and the real estate transactions tax is imposed on the sale of real estate and the like at a rate of 5% of the value of the property. This is in addition to raising the amount that the Kingdom shall bear, instead of Saudi citizens, of the value of the real estate transactions tax to 1,000,000 (one million Saudi riyals) from the purchase price of the first dwelling, instead of 850,000 (eight hundred and fifty thousand Saudi riyals) which are associated with value-added tax.

The real estate transactions tax is a tax that is imposed at a rate of 5% on all real estate transactions, including:

Sale
Bequest
Financial leasing
Lease-to-own process
Long-term usufruct contracts whose duration is more than 50 years.

Contents

What is the Real Estate Transactions Tax?