Real Estate Transaction Tax (RETT)
Synonyms: RETT، Real Estate Disposal Tax، Property Transfer Tax
Last updated: 2026-08-03
Short Definition
A 5% tax on the value of any real estate disposal, payable before title transfer, governed by a new law with a 15-article executive regulation effective 10 April 2025.
Overview
Legal Basis
The tax was originally imposed by Royal Order A/84 dated 14/2/1442H, effective 4 October 2020. A dedicated law was then issued by Royal Decree M/84 dated 19/3/1446H. Pursuant to Article 20 of that law, the board of the Zakat, Tax and Customs Authority issued Decision 01-03-25 dated 24/9/1446H, corresponding to 24/3/2025, approving the executive regulation, which comprises 15 articles and took effect on 10 April 2025. The Zakat, Tax and Customs Authority administers and collects the tax. Where final dues remain unpaid, the Authority applies Articles 73, 74 and 75 of the Income Tax Law issued by Royal Decree M/1 dated 15/1/1425H to recover them.
Practical Example
A citizen buys an apartment in Riyadh for SAR 1,400,000 as a first home. The 5% tax equals SAR 70,000. The state bears the tax on a first home up to SAR 1,000,000, or SAR 50,000, leaving the buyer to pay 5% on the remaining SAR 400,000, which is SAR 20,000. Had the buyer been an investor acquiring a commercial property at the same price, the full SAR 70,000 would apply with no relief. For comparison, if the sale were subject to 15% VAT the charge would be SAR 210,000, three times the RETT amount.
Common Mistakes
- ✗Believing the tax applies only to formally documented transactions, when the 5% rate applies whether or not documentation takes place.
- ✗Assuming off-plan or under-construction property is exempt, when the regulation covers completed, under-construction and off-plan property alike.
- ✗Calculating the first home relief on the full purchase price, when state coverage is capped at SAR 1,000,000 and any excess is taxed on the buyer.
- ✗Relying on the 2020 regulation, when a new 15-article regulation took effect on 10 April 2025.
- ✗Destroying transaction records after transfer, when the regulation requires records to be kept for five years inside the Kingdom.
International Differences
In the UAE, Dubai charges a 4% transfer fee on property value, customarily split between seller and buyer, alongside fixed administrative charges. Turkey applies a 4% title deed fee on the declared value, statutorily borne 2% by each party, plus fixed revolving fund charges. Egypt imposes a 2.5% real estate disposal tax on the total transaction value, payable by the seller. The Saudi 5% rate is nominally higher, but it replaced the 15% VAT that applied before 2020, and the state covers the tax on a citizen first home up to SAR 1,000,000, a relief with no direct equivalent in the other three systems.