The real cost of buying property in Saudi Arabia

Every transfer of real estate in the Kingdom is subject to a 5% Real Estate Transaction Tax, administered by the Zakat, Tax and Customs Authority (ZATCA). It replaced 15% VAT on property sales in October 2020. The rate is the same for Saudi and non-Saudi buyers.^{[1, 2, 3]}

Some transfers are exempt, including transfers between close family members such as inheritance and gifts, and certain government housing schemes. The full list and conditions are set out in ZATCA's RETT guideline.^{[2, 5]}

For an eligible Saudi citizen buying a first home, the state bears the 5% tax on up to SAR 1,000,000 of the price. Eligibility is confirmed through the Sakani programme; the tax on any amount above SAR 1 million remains payable.^{[2, 6]}

When a non-Saudi acquires a property right in Riyadh, Jeddah, Makkah or Madinah, REGA charges a 2% fee on top of the 5% RETT. The law permits a fee of up to 5%; the Implementing Regulations currently set it at 2% and zero-rate certain transfers.^{[3, 7]}

Unless the parties agree otherwise in writing in the brokerage contract, commission is 2.5% of the price in a sale and 2.5% of the first year's rent in a lease. It is paid by the party that signed the brokerage contract.^{[4, 8]}

1. 01

   Agree terms and verify the deed

   Confirm the seller's electronic title deed is valid and unencumbered before any payment.^[9]

2. 02

   Settle the transaction tax

   Pay the 5% RETT through ZATCA; non-Saudi buyers in the four cities also pay the 2% REGA fee.^{[2, 3]}

3. 03

   Transfer electronically

   The Ministry of Justice's Najiz service handles electronic conveyance (ifragh) and issues a new electronic deed in the buyer's name.^[9]