The Real Estate Transaction Tax (RETT) replaced VAT on real estate and is now a core part of the cost of any property sale or transfer in Saudi Arabia. This guide explains the rate, the first-home exemption, who pays, and how — with worked examples.
Rate and basis
The tax is 5% of the total property value upon disposal (sale, transfer, assignment). It is calculated on the agreed value or the market value, whichever is higher, and paid through the Zakat, Tax and Customs Authority (ZATCA) platform before the title transfer is documented.
First-home citizen exemption
The key exemption for individuals: a Saudi citizen buying their first home is exempt up to SAR 1 million of the property value. If the value exceeds 1 million, the 5% tax applies only to the portion above 1 million, not the whole amount.
| Case | Property value | Tax due |
|---|---|---|
| Citizen first home | SAR 800,000 | SAR 0 (exempt) |
| Citizen first home | SAR 1,500,000 | SAR 25,000 (on 500k) |
| Not a first home | SAR 1,500,000 | SAR 75,000 (on full) |
Who pays and how?
The seller usually bears the tax. The process is:
- Document the real estate disposal on the ZATCA platform.
- Calculate and pay the tax electronically.
- Complete the title transfer at the notary after proof of payment.
Exempt transactions
Exemptions include: inheritance, bequests, gifts to first-degree relatives, charitable endowments (waqf), transfers to government entities, and certain other cases under the regulation.