Saudi Arabia – Property Taxes

What taxes and fees apply when buying a property in Saudi Arabia?

The cost structure for purchasing property in Saudi Arabia is relatively uncomplicated. Unlike jurisdictions such as the UK, where Stamp Duty Land Tax can reach 5–6% or more on a standard residential purchase, or Australian states with their own comparable stamp duty frameworks, Saudi Arabia does not levy any stamp duty on property acquisitions. The dominant transaction cost a buyer must contend with is the Real Estate Transaction Tax (RETT).

The RETT Law establishes a uniform 5% charge on the total value of all real estate transactions, irrespective of the property’s ownership, type, intended use, or physical condition — encompassing residential, commercial, and industrial assets alike. The revised law and its implementing regulations came into effect on 10 April 2025 and are overseen by the Zakat, Tax and Customs Authority (ZATCA).

The tax is computed against the price agreed between the contracting parties, provided that this figure cannot fall below the property’s fair market value at the time of transfer. It applies regardless of whether the transfer is complete or partial, and regardless of whether the property is developed or undeveloped.

A common misconception among buyers is that they are automatically responsible for settling the RETT. Under the law, the seller bears primary liability unless the sale contract expressly assigns this obligation to the buyer. If you are purchasing, it is therefore essential to establish clearly in writing who will bear the RETT before the transaction proceeds.

In addition to the RETT, buyers should factor in the following transaction costs (as of 2025; verify current figures with ZATCA and relevant service providers):

• Notary/documentation fees: Charged by notary offices or the Ministry of Justice for deed authentication. These are generally modest — often a few hundred SAR — though they can vary according to the complexity of the transaction.
• Property registration fees: Title transfer is recorded with the Ministry of Justice. Registration fees are ordinarily low and are set administratively.
• Legal/advisory fees: Engaging a property lawyer or consultant typically costs around 0.5%–1% of the purchase price, though this is not a statutory requirement.
• Real estate agent fees: Agents typically charge 2%–2.5% of the purchase price, though this is negotiable and may be divided between the parties.
• Valuation fees: A formal property appraisal — commonly required for mortgage-backed purchases — represents an additional out-of-pocket expense.

Worked example — approximate purchase costs on a SAR 1,500,000 property (as of 2025)

Note: Depending on the terms of the sale contract, the RETT may be the seller’s responsibility rather than the buyer’s. Always verify current fee schedules with ZATCA and the Ministry of Justice prior to completing any transaction.

What taxes and fees apply when selling a property in Saudi Arabia?

The seller carries the primary obligation to remit the RETT before or at the time of the ownership transfer. At a flat 5% of the transaction value, this represents the seller’s main tax liability — although, as discussed above, it can be contractually transferred to the buyer. Compared with markets like Canada, where a seller may face a combination of real estate agent commissions and capital gains tax, the Saudi framework is considerably more streamlined for individual sellers.

Payment of the RETT is a precondition for completing the transfer, whether that process occurs digitally through the Ministry of Justice or via a notary office. Until the tax is fully settled, the transaction cannot be concluded.

Beyond the RETT, sellers should also account for the following typical costs:

• Real estate agent commission: Ordinarily 2%–2.5% of the sale price. This tends to be the most significant variable cost for a seller after the RETT itself.
• Legal fees: Where a solicitor or legal adviser is engaged to draft or review the sale agreement, this usually runs to 0.5%–1% of the transaction value.
• Mortgage discharge fee: If the property carries a mortgage, administrative charges may arise when discharging the mortgage ahead of or at the point of completion.

Saudi nationals selling real estate may also have Zakat implications to consider, depending on how the disposal affects their overall Zakat liability. Non-Saudi individuals are not subject to Zakat, but should be mindful of corporate income tax exposure if the sale takes place through a company structure (see the capital gains section below). It is advisable to confirm your individual position with a qualified local tax adviser.

Is capital gains tax payable on property sales in Saudi Arabia?

Individual property owners in Saudi Arabia enjoy a complete exemption from capital gains tax on property appreciation. This allows for entirely tax-free growth in property wealth — a considerable advantage relative to most major international markets. In the United Kingdom, for example, capital gains tax on residential property is charged at rates of 18%–24%, while in Australia, capital gains are folded into assessable income with a 50% discount available for assets owned for more than 12 months. Saudi Arabia imposes no analogous charge on individual sellers whatsoever.

The position differs for corporate entities and non-resident company investors. Non-resident capital gains are subject to a 20% tax rate, and non-Saudi, non-GCC residents conducting business in Saudi Arabia face a corporate tax rate of 20% on their net adjusted profits. Capital gains form part of total taxable income and are taxed at 20% in proportion to the non-Saudi shareholding.

Where Saudi-owned shares in a Saudi company are involved, any gain from the disposal of real estate held within that company would typically be subject to Zakat rather than income tax. When investors in a Saudi resident company sell their shares, the resulting change of ownership must be reported to ZATCA within 60 days of the transaction; failure to do so renders both the buyer and seller jointly liable.

Capital gains derived from selling securities listed on the Saudi stock exchange are exempt from tax; however, this exemption applies only to securities acquired after the date on which the 2005 legislation took effect.

Practical example — individual property sale

An individual owner — whether resident or non-resident — buys a villa for SAR 1,000,000 and sells it five years later for SAR 1,500,000, generating a gain of SAR 500,000. No personal capital gains tax is owed on that gain. The only tax triggered by the transaction is the 5% RETT calculated on the SAR 1,500,000 sale price (equating to SAR 75,000), which falls on the seller unless the parties agree otherwise. Always obtain advice from a qualified adviser to confirm your personal position, as rules are subject to change.

Are there annual property taxes in Saudi Arabia?

Saudi Arabia’s tax regime primarily targets undeveloped and vacant land rather than occupied properties. Residential and commercial properties that are in use face no recurring annual property tax — a striking contrast to systems such as the UK’s Council Tax, Ireland’s Local Property Tax, or the municipal property rates common across Europe, North America, and Australia, where all homeowners are routinely subject to annual levies.

The country has no municipal, regional, or city-level taxes; all taxation is administered at the federal level. For the overwhelming majority of expatriates who own and occupy a home in Saudi Arabia, there is simply no annual property tax to plan for.

There is, however, a significant exception: the White Land Tax (WLT), which is aimed squarely at undeveloped urban plots. Parcels of land left undeveloped — referred to as “white land” — attract an annual tax of up to 10% of their assessed market value, with the levy applying to plots of 5,000 square metres or more situated within urban boundaries. The WLT is administered and collected by the Ministry of Municipal, Rural Affairs, and Housing.

In addition, buildings that have stood vacant for extended periods are subject to fees ranging from 5% to 10% of property value, with the precise rate depending on the length of vacancy and the discretion of local authorities. The intent behind these charges is to encourage development and discourage speculative land-holding, rather than to raise broad-based revenue from ordinary homeowners.

For a typical owner-occupier in Riyadh or Jeddah — whether in an apartment or a villa — the ongoing annual property tax burden is effectively nil. The WLT concerns mainly developers and investors sitting on undeveloped land within city limits. If you are purchasing undeveloped land, always verify whether the WLT will apply by consulting the Ministry of Municipal, Rural Affairs, and Housing or a local tax adviser.

How is rental income from property taxed in Saudi Arabia?

Individual property owners receiving rental income have no personal income tax liability on those earnings in Saudi Arabia. The Kingdom does not levy personal income tax on individuals — whether Saudi nationals or expatriate residents. If you own property in your own name and collect rent, that income is wholly untaxed within the Kingdom. This is a marked departure from the norm in most countries, where rental profits are routinely subject to income tax.

The situation is more nuanced for non-resident individuals and corporate landlords. Rental income channelled through corporate structures is subject to a 20% corporate income tax, and the 5% RETT applies to all property transfers with effect from April 2025. Non-Saudi companies earning rental income from property located in Saudi Arabia are therefore taxed at the 20% corporate rate on their net profits.

Withholding tax is applicable to payments sourced in Saudi Arabia, which encompasses payments for services provided to a beneficiary in the Kingdom, as well as royalties and charges for the use of moveable and immovable property. Non-resident landlords receiving rental payments from tenants in Saudi Arabia should seek specialist guidance on their withholding tax position, as this can materially affect the net yield they ultimately receive.

For individual landlords who are tax-resident in another country, Saudi rental income may still attract tax liability in that jurisdiction. Many countries tax their residents on worldwide income, meaning a landlord based in France, Germany, or Canada, for example, may be obliged to declare their Saudi rental receipts on their domestic tax return — irrespective of the fact that no Saudi personal income tax applies. Cross-border advice from an international tax specialist is strongly recommended if you are ordinarily resident outside the Kingdom.

On the subject of short-term rental platforms such as Airbnb: while Saudi Arabia has been actively developing its tourism and hospitality offering under the Vision 2030 programme, the specific regulatory framework for short-term rentals continues to evolve. Operators should consult the Ministry of Tourism for current licensing and registration requirements and should verify VAT registration thresholds with ZATCA, as commercially operated short-term letting may be treated differently from long-term residential lettings for regulatory purposes. Always confirm the prevailing rules directly with ZATCA at zatca.gov.sa.

Does inheritance tax apply to property in Saudi Arabia?

Saudi Arabia levies no inheritance or estate tax of any kind. When a property owner dies, their heirs are not required to pay any tax on what they receive. This represents a substantial advantage for owners planning their estate, and contrasts sharply with countries such as the UK — where Inheritance Tax is charged at 40% above the applicable threshold — as well as Germany, France, and the United States, where estate taxes or inheritance taxes apply in various forms on larger transfers of wealth.

It is nevertheless important to recognise that the absence of a Saudi inheritance tax does not eliminate all complexity from cross-border estate administration. The distribution of a deceased’s estate in Saudi Arabia is governed primarily by Islamic inheritance law (Sharia), which prescribes fixed entitlements for heirs. This framework applies to Muslim nationals and may also affect the handling of Saudi-based assets even where the deceased was not a Saudi citizen.

Under the RETT Law, a number of transactions are explicitly exempt from the 5% charge — including transfers to charitable bodies, certain corporate transactions such as mergers and capital contributions, inheritance transfers, and qualifying family gifts. This means that property passing to heirs through inheritance is not subject to RETT, which provides meaningful relief at an already difficult time.

Non-resident heirs who receive Saudi property through inheritance should be aware that their home country may seek to impose tax on the inherited asset. Certain jurisdictions apply inheritance or estate tax to their own nationals on assets held anywhere in the world. Saudi Arabia’s double taxation treaty network is limited and does not generally extend to inheritance tax matters, making professional advice from both a Saudi legal specialist and a tax adviser in the heir’s home country highly advisable.

Does gift tax apply to property transfers in Saudi Arabia?

Saudi Arabia has no standalone gift tax. There is no equivalent of the UK’s gift-with-reservation provisions, the United States federal gift tax regime, or the donor’s tax found in certain other jurisdictions. Property transferred as a gift between individuals during a lifetime is not subject to any separate gift tax charge.

That said, the RETT framework does capture certain gifted property transfers within its scope. The Real Estate Transaction Tax applies at a flat rate of 5% to all transfers of property ownership — including sales, compensated gifts, and exchanges. A “compensated gift” — where some form of consideration or value changes hands in connection with the transfer — therefore falls within the 5% RETT. A purely gratuitous gift (with no consideration involved) between close family members may qualify for an exemption under the RETT rules, particularly for transfers among first-, second-, and third-degree relatives as defined in ZATCA’s guidelines.

ZATCA defines the relevant family degrees as: first degree (fathers, mothers, grandparents, and grandmothers), second degree (sons, daughters, and their descendants), and third degree (brothers, sisters, siblings, and the children and grandchildren of a parent). Transfers falling within these family categories may be eligible for RETT exemption, subject to the conditions set out in the 2025 Implementing Regulations. Always confirm whether a proposed gifted transfer qualifies for exemption with ZATCA or a qualified property lawyer before proceeding.

As with inherited property, assets received as gifts by individuals who are tax-resident abroad may be subject to taxation in that country under its own domestic rules. Cross-border advice is strongly encouraged in such circumstances.

Are there any tax advantages or incentives for buying property in Saudi Arabia?

Saudi Arabia offers a range of meaningful tax advantages and incentive schemes, especially for first-time purchasers, Saudi nationals, and investors operating in designated zones, as part of the broader property market transformation driven by Vision 2030.

First-home relief for Saudi nationals: A Royal Decree introduced the RETT framework in October 2020, and under its provisions the government absorbs the tax liability on the first SAR 1 million of the purchase price for eligible Saudi nationals buying their first home. This effectively reduces the RETT burden for qualifying first-time buyers. The current threshold should be confirmed directly with ZATCA, as it may be revised over time.

RETT exemptions for designated transactions: The RETT Law sets out an expanded catalogue of exemptions designed to promote fair application of the tax and to incentivise certain transactions. These include transfers to charitable organisations, specific corporate restructuring activities, inheritance transfers, and qualifying intra-family gifts — all of which may attract meaningful relief in appropriate circumstances.

Special Economic Zones (SEZs): Investors in designated special economic zones may benefit from additional tax incentives or waivers, particularly those involved in foreign investment or strategic development projects, even though standard RETT rates continue to apply across the Kingdom generally. Those targeting SEZ-located assets should seek tailored advice regarding the specific incentive packages on offer.

Regional investment incentives: The government provides 10-year tax incentives for investments made in six less-developed provinces: Hail, Jizan, Abha, Northern Border, Najran, and Al-Jouf. These are primarily designed for commercial investment activities but may extend to property investors operating on a commercial basis in those areas.

No recurring tax burden: For both owner-occupiers and investors, the combination of no annual property tax on occupied properties and no personal income tax on rental receipts delivers a compelling ongoing financial advantage over equivalent investments in most other markets worldwide. The overall tax architecture in Saudi Arabia confers significant benefits relative to other international property investment destinations, particularly in respect of recurring tax obligations and the treatment of capital appreciation.

Do different rules apply to foreign buyers or non-residents purchasing property in Saudi Arabia?

Foreign nationals encounter both constraints and widening opportunities when seeking to purchase property in Saudi Arabia. The regulatory landscape has been transforming rapidly under Vision 2030, with access for non-Saudi buyers gradually expanding in recent years.

Ownership restrictions: Non-Saudi nationals were historically barred from owning property in Saudi Arabia. The rules have been progressively relaxed, but certain restrictions persist in specific areas. This shift is consistent with the Kingdom’s wider economic reform agenda, including the New Investment Law that came into effect in February 2025, which simplifies the regulatory environment and establishes equal treatment for domestic and foreign investors. Non-Saudi nationals may now own property in designated areas, including high-demand Riyadh neighbourhoods such as Al Malqa, Al Nakheel, and King Abdullah Financial District, as well as Jeddah’s coastal areas including Jeddah Corniche, Al Naeem, and Al Rawdah.

Non-Muslims are prohibited from owning property in the holy cities of Makkah and Madinah, though indirect investment through listed real estate companies remains an option. It is essential to verify ownership eligibility for any specific location with a local property lawyer before making any purchase commitment.

RETT applies equally to all: The RETT applies to all parties — Saudi nationals and foreigners alike — at the same rate and under the same rules. There is no additional RETT surcharge for foreign purchasers, unlike markets such as Canada or Singapore, where non-resident buyers face substantial supplementary transaction taxes on top of the standard rate.

Corporate versus personal ownership: For buyers based outside Saudi Arabia, the RETT rate remains 5%, but ownership may require specific approvals or investment pathways — for example, acquisition through a corporate vehicle. Non-resident investors should obtain advice on the most suitable ownership structure, since holding property through a Saudi company carries different tax consequences (notably, the 20% corporate income tax on profits) compared with holding it personally.

Withholding tax for non-residents: Non-resident companies or individuals receiving rental income originating in Saudi Arabia may be subject to withholding tax on those payments. The applicable rate and scope depend on the nature of the payment and on whether a double taxation agreement exists between Saudi Arabia and the investor’s home country. ZATCA has published guidance on the application of double tax treaties; consult zatca.gov.sa for details of the current treaty network.

Home country tax obligations: International investors must also weigh up home country tax implications, professional advisory requirements, and documentation costs to achieve full compliance and optimal tax efficiency across multiple jurisdictions. Even in the absence of Saudi personal income tax or capital gains tax, an investor’s home country may tax their worldwide income and gains — making thorough cross-border tax planning an essential element of any investment strategy.

Frequently Asked Questions

Is there any annual property tax on a residential home I own and live in?

No. Occupied residential and commercial properties attract minimal or no annual property tax in Saudi Arabia. The government’s tax efforts are directed at incentivising development and discouraging long-term vacancy of land and buildings, rather than at levying recurring charges on homeowners. If you live in or let out your property, you will not face any annual ownership levy comparable to council tax or municipal rates in other countries.

Who actually pays the RETT — the buyer or the seller?

Under the law, the seller is the primary party responsible for paying the RETT, unless the sale contract provides otherwise. This means the seller may absorb the RETT cost, or the buyer may bear it if that has been agreed and documented in writing. Always ensure this is clearly specified and recorded in your sale and purchase agreement before signing. The transaction cannot be completed until the RETT has been paid in full.

Do I need to pay tax on profit when I sell my property?

If you are an individual owner, Saudi Arabia does not impose any personal capital gains tax on profits from property sales. Your only tax-related liability is the 5% RETT on the sale price, which relates to the transaction itself rather than the profit element. Where property is held through a corporate structure with a non-Saudi shareholding, a 20% corporate income tax applies to net profits. Seek advice from a locally qualified tax adviser to clarify your specific circumstances.

I own an undeveloped plot of land. Does any annual tax apply?

Yes. Undeveloped land categorised as “white land” is subject to an annual tax of up to 10% of its assessed market value, applicable to plots of 5,000 square metres or more situated within urban boundaries. If your plot falls within this category, the White Land Tax could result in a significant recurring annual cost. Confirm whether your particular plot is in scope by consulting the Ministry of Municipal, Rural Affairs, and Housing.

Is rental income from my Saudi property taxable?

For individual owners — resident or non-resident — Saudi Arabia does not impose any personal income tax on rental receipts. However, if you are tax-resident in another country, you may be required to report that income on your domestic tax return. If the property is held through a company with non-Saudi ownership, corporate income tax at 20% applies to net profits. Consult a cross-border tax specialist to understand the full scope of your obligations.

Does my family have to pay tax when they inherit my Saudi property?

There are no inheritance or estate taxes in Saudi Arabia, and transfers of property through inheritance are also exempt from the RETT. However, the distribution of an estate in Saudi Arabia is governed by Islamic inheritance law (Sharia), and heirs who are based abroad may face tax obligations in their own country in respect of inherited assets. It is always advisable to seek guidance in both jurisdictions.

Can I gift my property to a family member tax-free?

Outright gifts between close family members — specifically those falling within the first three degrees of relation as defined by ZATCA — are generally eligible for exemption from the RETT. However, a “compensated gift” — one in which any form of consideration is received in return — is subject to the standard 5% RETT. Saudi Arabia has no standalone gift tax. Confirm exemption eligibility for your specific transaction with ZATCA or a qualified property lawyer before transferring ownership. Current exemption criteria are available at zatca.gov.sa.

Where should I go for official guidance on property taxes in Saudi Arabia?

The central authority is the Zakat, Tax and Customs Authority (ZATCA), which administers the RETT and all federal taxes in the Kingdom. Title registration is managed through the Ministry of Justice. Levies relating to land — such as the White Land Tax — fall under the remit of the Ministry of Municipal, Rural Affairs, and Housing. For transactions involving corporate structures, cross-border ownership, or significant values, engaging a locally licensed Saudi tax adviser or property lawyer alongside any international advisers is strongly recommended.