Real Estate Transaction Tax
Synonyms: RETT، Property Transfer Tax، Real Estate Transfer Tax
Last updated: 2026-05-07
Short Definition
5% tax on real estate sale transactions in Saudi Arabia, replacing VAT on real estate, paid by seller.
Overview
Legal Basis
RETT is based on Council of Ministers Resolution No. (84) of 1442 AH, the Real Estate Transaction Tax Regulation issued by ZATCA, and Royal Decree No. (A/84) of 1442 AH amending the VAT Law to exclude real estate transactions. The regulations specify exemption cases and the market value calculation mechanism, and the system requires tax payment before any real estate transaction registered with the Ministry of Justice.
Practical Example
Fahad, a Saudi owner in Jeddah, sells his land in Al-Zahra district for SAR 1,800,000 to the buyer Nasser. When entering Najiz to complete the ownership transfer, RETT of 5% = SAR 90,000 is calculated for Fahad. The amount is transferred directly to ZATCA via electronic payment. If the sale were to his older brother, he would be exempt from the tax because gifts between first-degree relatives are an exemption case (but the gift status must be documented, not as a sale, to obtain the exemption). After paying the tax, a new deed is issued in Nasser name within 24 hours on Najiz.
Common Mistakes
- ✗Assuming RETT equals 15% VAT — RETT is only 5%, and is different in nature and mechanism.
- ✗Delaying tax payment before contract documentation — ownership transfer is not completed until payment, delaying the transaction.
- ✗Trying to register a sale as a gift between relatives for tax evasion — may be detected and require paying the tax with penalties.
- ✗Overlooking that the property value for tax may be higher than the agreed price — ZATCA uses market value and may reject low pricing.
- ✗Assuming the buyer pays the tax by default — the default is on the seller unless otherwise agreed.
International Differences
Ownership transfer taxes differ substantially between countries. In the UAE, property registration fees are 4% in Dubai and 2% in Abu Dhabi, paid to the Land Department. In Turkey, Tapu Harcı (Tapu fees) are 4% split between seller and buyer. In Egypt, property registration fees are 2.5% of value. In the UK, Stamp Duty Land Tax (SDLT) is tiered from 0% to 12% depending on property value. In the US, Real Estate Transfer Tax differs between states (from 0% to 4%). The Saudi advantage of RETT lies in simplicity (uniform 5% rate), clear exemptions, and full electronic integration via ZATCA and Najiz, eliminating the need for manual transactions.