Saudi Real Estate Transaction Tax (RETT): the 5% tax on property transfers, explained

The short answer

Real Estate Transaction Tax (RETT) is a 5% tax on the value of almost every transfer of real estate in Saudi Arabia. It replaced VAT on property sales on 4 October 2020, and since 10 April 2025 it has sat in its own statute, the Real Estate Transaction Tax Law issued by Royal Decree No. M/84, with new Implementing Regulations approved by the ZATCA Board.

The seller (the law calls them the assignor) is liable. The tax is charged on the agreed price, but never on less than fair market value. For a notarised sale it must be paid before the notary will register the transfer. There is no registration threshold and no return: every transaction is declared and paid, one by one, through the RETT service on the ZATCA portal.

What counts as a real estate transaction

RETT is not limited to sales. ZATCA's guideline defines a real estate transaction as any transaction that transfers the ownership of real estate, or its benefit, permanently, whether directly or indirectly, or that transfers its benefit for more than 50 years. The condition and use of the property do not matter: land, buildings, part of a building, an undivided share or a single residential unit are all in scope.

Real estate itself now includes fixtures and equipment that form a fixed part of, or are permanently attached to, a building or engineering structure. That matters for hotels, industrial plants and energy assets, where the line between the building and the equipment inside it moves the tax base.

• Sales, barter and exchanges, including a sale to a relative.
• Gifts and waivers, unless the gift exemption applies.
• Finance leases, lease-to-own and Islamic ijarah ending in ownership.
• Usufruct rights granted for more than 50 years.
• Transfers of 30% or more of the interests in a real estate company, in one deal or in linked deals within three years.
• Build-own-operate-transfer (BOOT) projects, taxed when ownership actually transfers.
• Transactions evidenced only by an unofficial document, such as a private contract that is never notarised.

What falls outside the tax

The Implementing Regulations take some events out of scope altogether, which is different from an exemption: nothing needs to be claimed and no condition can be breached later.

• Subdividing land into separate plots while the same co-owners keep the same shares in each plot.
• Partitioning land held under a single deed among its co-owners, where each owner receives exactly their recorded share and no money changes hands between them.
• A capital increase in a real estate company that leaves every existing partner's percentage unchanged, or that brings in a new investor while the existing partners keep their interests for five years.
• The second leg of a Murabaha or finance-lease structure: the bank's purchase is taxed once, and the transfer to the customer under the same contract, for the same property and value, is not taxed again.
• Transfers of interests in a real estate company below the 30% threshold.

The tax base: agreed price, with a fair-market-value floor

RETT is 5% of the value agreed between the parties, provided that value is not below fair market value on the date of the transaction. The base includes everything inseparable from the property, such as licences and real rights attached to it. It excludes the profit margin built into a licensed financing arrangement: if a buyer pays SAR 1,400,000 over ten years for a SAR 1,000,000 home, the tax is SAR 50,000, not SAR 70,000.

Where the parties understate the price, ZATCA taxes the market value. The guideline's own example is land sold between relatives for SAR 1,000,000 when its market value was SAR 1,500,000: the tax is 5% of SAR 1,500,000, which is SAR 75,000.

• Share transfers in a real estate company: the higher of the market value of all its real estate multiplied by the percentage transferred, or the price allocated to the real estate.
• Usufruct over 50 years: the higher of the present value of the market value of the right, or the present value of the agreed payments over the whole term. If the payments are later changed, the parties must ask for the tax to be recalculated.
• BOOT projects: market value on the date ownership actually transfers, not on the date of the contract.

Who pays, and when

The assignor, meaning the seller, donor or grantor, is liable to ZATCA. Parties often agree that the buyer will bear the tax, and any person may pay the invoice, but that agreement does not move the legal liability. The 2025 regulations narrowed the buyer's exposure: the buyer is only jointly liable where ZATCA shows the buyer caused the non-payment, for example by agreeing to understate the price or by presenting an invalid first-home certificate.

For a notarised sale the tax falls due on the date of notarisation and must be paid on or before it; the Ministry of Justice system will not complete the transfer until ZATCA shows the tax paid or the transaction exempt. Transactions without notarisation have their own due dates:

• Possession handed over for ownership without notarisation: due on handover, pay within 30 days.
• Transfer of interests in a real estate company: due on the earlier of the transfer or an unconditional agreement to transfer, pay within 30 days.
• Usufruct over 50 years: due on the grant (unless cancelled within 30 days), pay within 30 days.
• BOOT projects: due on the actual transfer of ownership, pay within 30 days if not notarised.
• An exempt transaction whose conditions are later breached: due on the breach, pay within 30 days.

The first-home relief: the state pays on the first SAR 1 million

For a Saudi citizen buying a first home, the state bears the RETT on the price up to SAR 1,000,000. The buyer obtains a First Home certificate from the Ministry of Municipalities and Housing portal (housing.gov.sa) and gives it to the seller, who enters it when registering the sale on the ZATCA portal. ZATCA checks eligibility, and 5% applies only to the part of the price above SAR 1,000,000.

On a SAR 1,300,000 first home the full tax would be SAR 65,000. The state bears SAR 50,000 (5% of SAR 1,000,000) and SAR 15,000 (5% of the remaining SAR 300,000) is paid. If the certificate later proves invalid, both seller and buyer can be pursued for the tax.

Penalties

Late payment costs 2% of the unpaid tax for each month or part of a month, starting the day after the payment deadline and capped at 50% of the unpaid tax. That is down from 5% a month under the pre-2025 regulations. If ZATCA itself amends the tax due, a further 1% a month applies to the unpaid amount. On SAR 200,000 of tax paid 75 days late, three months or part-months have run, so the fine is 6%, or SAR 12,000.

Other breaches of the law, including refusing to provide documents ZATCA asks for, carry a fine of up to the tax due or SAR 50,000, whichever is greater. Tax evasion, such as understating the price with forged documents or misusing an exemption, carries a fine of up to three times the tax evaded, and anyone who helps is treated as a party to it.

RETT and VAT: two separate taxes

Since 4 October 2020, supplies of real estate that transfer ownership are exempt from VAT and subject to RETT instead. ZATCA says plainly that there is no link between the two: RETT is not VAT, it does not appear on a VAT return, and it cannot be recovered as input tax. A business whose only activity was selling real estate has its VAT registration cancelled; one that also leases commercial property or provides other taxable services stays registered and handles each sale separately through the RETT service.

Transactions already charged to VAT before RETT existed are not taxed twice. Where an ijarah or Murabaha contract was concluded, and VAT accounted for, before the switch, the later transfer of title at the notary is exempt from RETT.

Records, refunds and objections

• Keep deeds, contracts, payment records, valuations and evidence for any exemption for five years from the transaction, in the Kingdom (physical or on servers accessible from it).
• Request a correction through the portal within 30 days of learning that registered data is wrong, or of any event that breaks an exemption condition.
• Refunds, for tax overpaid, paid in error, or paid on a transaction that was cancelled or not completed, must be requested within twelve months of the date the tax became due. ZATCA decides within 30 days and pays within 30 days of approval.
• Object to a ZATCA decision within 60 days of notification. ZATCA has 90 days to decide, after which the case can go to the Internal Committee for Settlement or directly to the Committee for Resolution.
• Unsure how RETT applies? ZATCA accepts requests for a ruling on a specific transaction.

Questions people actually ask

Keep reading

• Tool: Saudi RETT calculator (5% Real Estate Transaction Tax)
• Guide: RETT exemptions in Saudi Arabia: every exemption, its conditions and the clawback periods
• Guide: RETT on share transfers in Saudi real estate companies: the 50% and 30% tests
• Guide: Accounting for Saudi RETT under IFRS: buyers, sellers, developers and clawbacks
• Guide: ZATCA e-invoicing Phase 2: integration, waves, and what your invoices must carry