What is the Real Estate Transaction Tax (RETT) in Saudi Arabia?

RETT (Real Estate Transaction Tax) is a 5% tax imposed by ZATCA on the sale, purchase, or transfer of real estate properties in Saudi Arabia. It applies to residential, commercial, and land transactions. The tax is calculated on the higher of the property's selling price or its fair market value, and must be paid within 60 days of the transaction date.

Who pays the RETT tax in Saudi Arabia?

The buyer is solely responsible for paying the 5% RETT tax in Saudi Arabia. This is a legal requirement under ZATCA regulations. The tax is calculated on the purchase price or fair market value of the property, whichever is higher. Always budget an additional 5% on top of the property price when planning your purchase.

Is there any exemption from RETT for first-time homebuyers?

Yes, Saudi nationals purchasing their first home may qualify for a RETT exemption on properties valued up to 1,000,000 SAR. The conditions include: the buyer must be a Saudi national, the property must be their first residential property, and the value must not exceed 1 million SAR. The exemption must be applied through ZATCA's portal within the 60-day payment window.

How is the RETT tax calculated?

RETT is calculated as: Property Value × 5% (0.05). For example, a property purchased for 800,000 SAR would incur a tax of 800,000 × 0.05 = 40,000 SAR. If the property is sold below market value, ZATCA may assess tax based on the fair market value instead. The total cost to the buyer is the property price plus the 5% tax.

When must RETT be paid?

RETT must be paid within 60 calendar days from the date of the real estate transaction. Failure to pay on time results in a penalty of 1% of the unpaid tax for each month of delay. It is crucial to file and pay through the ZATCA portal or authorized bank channels promptly.

Does RETT apply to gifted properties or inheritance?

Inheritance transfers (wirasat) are generally exempt from RETT. Gifted properties may also be exempt if transferred between direct relatives (spouse, parents, children). Divorce settlement property divisions are also exempt. However, it is recommended to verify your specific situation with ZATCA or a licensed real estate consultant.

Can the seller pay the RETT instead of the buyer?

While the law states the buyer is responsible for RETT, the buyer and seller can agree in the sales contract that the seller will bear the tax cost. However, this is uncommon in practice. If agreed, the contract should explicitly state this arrangement to avoid disputes later.

What happens if I don't pay RETT on time?

Late payment of RETT results in a penalty of 1% per month on the unpaid tax amount. In severe cases, ZATCA may also restrict property registration and legal ownership transfer. The penalty accrues from the day after the 60-day deadline until full payment is made.

Property Tax Guide

The Complete Guide to Real Estate Transaction Tax (RETT) in Saudi Arabia 2026

Buying property in Saudi Arabia? The 5% RETT tax is a major cost factor. This guide explains everything from exemptions to payment deadlines.

Introduction

Buying a home in Saudi Arabia is an exciting milestone. Whether you are a young Saudi family purchasing your first apartment in Riyadh, or an expat professional investing in a villa in Jeddah, the process involves not just the property price but also an additional cost that many first-time buyers overlook: the 5% Real Estate Transaction Tax (RETT).

Administered by ZATCA (the Zakat, Tax and Customs Authority), RETT is a 5% tax on the sale, purchase, or transfer of real estate. On a 1,000,000 SAR property, that is 50,000 SAR in tax alone. For a 2,500,000 SAR villa, the tax jumps to 125,000 SAR. These are significant amounts that can derail your budget if not planned for in advance.

This guide explains how RETT works in 2026 — who pays, how to calculate it, when to pay, and most importantly, the exemptions available for first-time homebuyers. Use our free RETT Tax Splitter Calculator to instantly compute your tax liability.

What is RETT (Real Estate Transaction Tax)?

The Real Estate Transaction Tax (RETT), known in Arabic as ضريبة التصرفات العقارية, is a tax imposed by ZATCA on all real estate transactions in Saudi Arabia. It was introduced as part of the kingdom's broader fiscal reforms and revenue diversification under Vision 2030.

The Standard Rate: 5% of the property's selling price or its fair market value, whichever is higher. ZATCA determines the fair market value based on similar property sales in the same area and valuation guidelines. If you declare a price that is significantly below market value, ZATCA has the authority to assess the tax based on the higher fair market value.

What Transactions are Covered? Buying or selling residential properties (apartments, villas), commercial properties (offices, shops, warehouses), and land (vacant plots, agricultural land). Also includes property exchanges, transfers of ownership, and assignment of real estate rights.

Who is Responsible for Paying RETT?

The Golden Rule: The Buyer pays. According to ZATCA regulations, the buyer is solely and legally responsible for the 5% RETT. This is a critical point because many first-time buyers assume the cost is shared or included in the property price.

Important

The RETT is calculated on top of the property price. If you are buying a property for 1,000,000 SAR, you need to budget an additional 50,000 SAR for the tax. Unlike some countries where property taxes are built into the mortgage, RETT in Saudi Arabia is a separate upfront cost.

RETT Exemptions in Saudi Arabia (2026 Rules)

Several categories of transactions qualify for RETT exemptions. This is the most important section for many buyers:

First-Time Homebuyer Exemption

Conditions for Exemption:

The buyer must be a Saudi national (expatriates are not eligible for this exemption).
The property must be the buyer's first residential property.
The property value must be 1,000,000 SAR or less.
The property must be used for residential purposes (not commercial).
The buyer must apply for the exemption through ZATCA's portal within the 60-day payment window.

If all conditions are met, the 5% RETT is waived entirely on the first million riyals.

Other Exemptions

Inheritance Transfers (Wirasat)

Transferring property ownership through inheritance is fully exempt from RETT. However, the heirs must register the property through the Ministry of Justice's inheritance system (Wirasat platform) to document the transfer legally.

Divorce Settlements

Property transfers resulting from divorce (Talaq or Khula) are exempt from RETT. This includes the division of jointly owned property or transfer of the family home to one spouse.

Government & Non-Profit Transfers

Property transfers involving government entities or registered non-profit organizations (charities) are exempt from RETT.

Gifts Between Direct Relatives

Property gifted between spouses, parents, and children is generally exempt. However, the gift must be documented through the legal process to qualify.

Step-by-Step Calculation Formula

Calculating your RETT liability is straightforward:

Step 1: Determine the property value (selling price or fair market value, whichever is higher)

Step 2: Multiply by 5% (0.05)

Step 3: RETT Amount = Property Value × 0.05

Step 4: Total Cost to Buyer = Property Price + RETT Amount

Note on Fair Market Value: If ZATCA determines that the declared selling price is significantly below the fair market value, they have the right to assess RETT based on the market value. This prevents under-reporting to reduce tax liability.

Real-Life Calculation Examples

Example 1: Buying an Apartment in Riyadh (800,000 SAR)

Property Price: 800,000 SAR

RETT: 800,000 × 0.05 = 40,000 SAR

Total Cost to Buyer: 800,000 + 40,000 = 840,000 SAR

Example 2: Buying a Villa in Jeddah (2,500,000 SAR)

Property Price: 2,500,000 SAR

RETT: 2,500,000 × 0.05 = 125,000 SAR

Total Cost to Buyer: 2,500,000 + 125,000 = 2,625,000 SAR

Example 3: First-Time Buyer Exemption (850,000 SAR)

Property Price: 850,000 SAR (within the 1,000,000 SAR exemption limit)

Buyer Status: Saudi national, first residential property

RETT: 0 SAR (Fully exempt)

Savings: 42,500 SAR

How and When to Pay RETT

The 60-Day Deadline

RETT must be paid within 60 calendar days from the date of the real estate transaction. This is a strict deadline. If day 60 falls on a weekend or public holiday, the deadline extends to the next working day.

How to File and Pay

Payment is made through ZATCA's online portal. You need to create an account, register the transaction, upload the sales contract, and pay via SADAD or credit card. Many banks also offer RETT payment services through their apps. The payment receipt is required to complete the property registration with the Ministry of Justice.

Late Payment Penalties

1% of the unpaid tax is charged for each month of delay. For example, a 50,000 SAR RETT delayed by 3 months results in a 1,500 SAR penalty. Continued non-payment can lead to legal restrictions on the property.

Common Mistakes Buyers Make with RETT

1. Not Budgeting for the 5% Tax

The most common mistake. Buyers save for the property price but forget the 5% tax. If you are buying a 1,500,000 SAR home, you need to find an additional 75,000 SAR for RETT.

2. Missing the 60-Day Window

Life gets busy and 60 days can pass quickly. Set a reminder immediately after signing the contract. The 1% monthly penalty adds up fast.

3. Assuming the Seller Will Pay

Unless explicitly stated in the sales contract, the buyer is responsible. Never assume otherwise without written agreement.

4. Under-Declaring the Property Value

Some buyers try to declare a lower price to reduce RETT. ZATCA cross-references declared prices with fair market values. If caught, you must pay the difference plus penalties.

How to Use the Sauditoolhub RETT Tax Splitter Calculator

Our free RETT Tax Splitter Calculator makes it easy to calculate your exact tax liability. Simply enter the property price, select the property type and buyer status, and the calculator instantly shows the RETT amount, total cost, and applicable exemptions.

Also check out our Mortgage vs Rent Calculator to decide which option is better for you, and the Property Valuation Tool to estimate fair market value.

Conclusion

The Real Estate Transaction Tax (RETT) is a significant cost when buying property in Saudi Arabia. At 5% of the property value, it adds tens of thousands of riyals to your purchase. But with proper planning — understanding the exemptions available, budgeting for the tax upfront, and paying within the 60-day window — you can navigate the process smoothly.

For first-time Saudi homebuyers, the exemption on properties up to 1,000,000 SAR is a valuable benefit that can save you from paying tens of thousands in taxes. Make sure to apply through ZATCA's portal within the required timeframe.

Calculate your exact RETT liability with the Sauditoolhub RETT Calculator and visit our blog for more guides on property and finance in Saudi Arabia.