Saudi Arabia has opened its doors to foreign property ownership in recent years — but before you sign anything, there’s one financial obligation every expat buyer must understand: the real estate transaction tax.
What is real estate transaction tax — and does it apply to expats?
The real estate transaction tax (RETT) is a government-imposed tax that applies whenever a property changes ownership in Saudi Arabia. Regulated by the Zakat, Tax and Customs Authority (ZATCA), it applies to residential, commercial, and investment properties alike — and yes, it applies to foreign nationals and expats just as it does to Saudi citizens.
At Basri Developments, we work with expat buyers from across the region and beyond. One of the first questions we get asked is: “What taxes will I pay?” This guide is designed to answer that question clearly.
How much is the tax?
The tax is calculated as a flat 5% of the agreed sale price at the time of transfer. There are no tiered rates or expat-specific surcharges — the rate is the same regardless of your nationality.
| Property value (SAR) | Tax at 5% | Total cost |
|---|---|---|
| 500,000 | 25,000 | 525,000 |
| 1,000,000 | 50,000 | 1,050,000 |
| 2,000,000 | 100,000 | 2,100,000 |
| 5,000,000 | 250,000 | 5,250,000 |
As an expat buyer, are you responsible for the tax?
Under Saudi law, the seller is primarily responsible for paying the real estate transaction tax. However — and this is important for expat buyers to understand — the responsibility can be negotiated between both parties.
In practice, some sellers pass the tax obligation on to the buyer, or split it. This means that as a foreign buyer, you could end up paying part or all of the 5% tax depending on how the sale agreement is written.
Basri Developments always advises expat clients to review the tax clause in any sale agreement carefully before signing. Do not assume the seller will cover it — confirm it in writing.
Which transactions are subject to RETT?
As a foreign expat, the following types of transactions will typically trigger the real estate transaction tax:
- Purchasing a residential property (apartment, villa, townhouse)
- Buying commercial real estate or office space
- Acquiring investment properties or land
- Receiving a property transfer (even as part of a corporate restructure)
- Certain gift or inheritance transfers, depending on legal structure
If you are unsure whether your specific transaction qualifies, it is best to verify with ZATCA or seek legal counsel before proceeding.
When does the tax need to be paid?
The real estate transaction tax must be paid before the official transfer of ownership is registered. Payment is made through government platforms linked to ZATCA and the property registration system.
For expats who may be unfamiliar with the local processes, this is one of the most common points where transactions stall. Failing to arrange payment in advance can delay your registration and, in some cases, put the deal at risk.
The Basri Developments team assists expat clients with navigating this process so that nothing falls through the cracks on the way to completing your purchase.
Common mistakes expat buyers make
- Not budgeting for the 5% tax on top of the purchase price
- Assuming the seller will always cover the tax without it being stated in the contract
- Undervaluing the property to reduce the tax — this can trigger compliance issues with ZATCA
- Leaving tax payment to the last minute and delaying the registration
- Proceeding without understanding whether their property type qualifies for any exemptions
What can go wrong — and how to avoid it
Real estate disputes involving tax obligations are more common than many expat buyers expect. Typical issues include disagreements over who was responsible for payment, disputes over the declared property value, and complications arising from incorrect tax filings.
For foreign nationals who are less familiar with Saudi regulatory processes, these issues can be particularly difficult to resolve. Engaging a trusted real estate partner from the start significantly reduces the risk of running into these problems.
What every expat buyer should take away
The real estate transaction tax is a straightforward 5% levy on the value of any property transaction in Saudi Arabia. It applies to expats and Saudi nationals alike, and it must be paid before ownership is officially transferred.
The key things to remember as a foreign buyer: budget for it upfront, confirm who pays it in your sale agreement, and make sure payment is arranged well before your registration date.
At Basri Developments, we have helped expat clients from across the world navigate property transactions in Saudi Arabia with confidence. If you have questions about buying property as a foreign national, our team is here to guide you every step of the way.
We are currently helping expats who are interested in Jidia Towers navigate the entire buying process — from understanding your tax obligations to completing your ownership transfer with confidence. If Jidia Towers is on your radar, our team is ready to walk you through everything you need to know, so you can move forward without uncertainty.
Contact Basri Developments now — your Saudi Arabia property journey starts here.
Basri Developments — Curating premium real estate opportunities in Saudi Arabia since Vision 2030 began shaping the future.
Frequently Asked Questions (FAQs)
Generally, residential property transactions are subject to RETT and are exempt from VAT. However, commercial property transactions may attract VAT instead of or in addition to RETT depending on the nature of the deal. The two taxes are not typically applied simultaneously on the same transaction, but this should be verified for your specific deal type.
Yes. The tax applies to foreign nationals and expats in exactly the same way it applies to Saudi citizens. There are no expat-specific surcharges — the rate is a flat 5% regardless of your nationality.
This depends on the specific development and location. Some properties available to expats are freehold (full ownership), while others may be structured as long-term leasehold arrangements. Understanding the ownership structure before signing is critical, as it affects your resale rights and the property’s value.
Joint ownership between a foreign national and a Saudi citizen is possible, but the legal structure of such arrangements needs careful consideration. The ownership split, liability for taxes like RETT, and what happens upon the death of one party should all be addressed in the sale agreement.
Access to mortgage financing in Saudi Arabia for non-residents and expats is more limited compared to Saudi nationals. Some banks do offer products for resident expats, but terms, eligibility, and loan-to-value ratios differ significantly. It’s advisable to confirm financing options early in the process before selecting a property.
Saudi Arabia does not currently have a recurring annual property tax in the traditional sense. However, undeveloped or vacant land may be subject to the White Land Tax (WLT), which is a separate levy aimed at encouraging development. Understanding whether your purchased land or property falls under this is important for long-term cost planning.