Saudi Arabia — Real Estate Transaction Tax (RETT) — Skill v1.0

---

Section 1 — Quick reference

Field	Value
Country	Kingdom of Saudi Arabia (KSA)
Tax	Real Estate Transaction Tax (RETT)
Arabic name	ضريبة التصرفات العقارية (Ḍarībat al-Taṣarrufāt al-ʿAqāriyyah)
Currency	SAR (Saudi Riyal, ر.س)
Tax basis	Per-transaction (no annual return — declared and paid at the point of each disposal)
Primary legal authority	Royal Decree No. (A/84) dated 14/2/1442H (1 October 2020) establishing RETT and exempting real-estate disposals from VAT
Implementing rules	Real Estate Transaction Tax Bylaws issued by ZATCA (originally published October 2020; amended subsequently)
Headline rate	5% of the agreed transaction value, or fair market value if higher
Tax authority	Zakat, Tax and Customs Authority (ZATCA) — هيئة الزكاة والضريبة والجمارك
Declaration channel	ZATCA online portal — declared BEFORE notarisation of the title transfer
Payment	At declaration; notary / Ministry of Justice will not register the transfer without a ZATCA RETT clearance reference
Legal liability	The seller (transferor) is the legal taxpayer; commercial practice often shifts the economic burden to the buyer
Replaces	The pre-1 October 2020 regime where real-estate disposals were subject to 15% VAT
Validated by	Pending — requires sign-off by a Saudi-licensed tax practitioner or ZATCA-registered consultant
Skill version	1.0

Rate and exemption at a glance

Transaction	Treatment
Sale of any real estate (land, residential, commercial, industrial)	5% RETT on transaction value or FMV (greater of)
Exchange (barter) of real estate	5% RETT on each leg, based on FMV of each property
Long-term lease ≥ 50 years	5% RETT on aggregate lease consideration (treated as a disposal)
Gift to a non-first-degree relative or unrelated party	5% RETT on FMV
Gift to first-degree relative (parent, child, spouse)	Exempt (with documentary proof)
Inheritance transfer	Exempt
Contribution of real estate to corporate capital (share-for-property)	5% RETT on FMV unless qualifying restructuring relief applies
Saudi-national first-home buyer, up to SAR 1,000,000 of value	Exempt (verify current cap with ZATCA)
Waqf (endowment) transfers	Exempt
Sale and leaseback (genuine financing)	May be exempt — case-by-case ZATCA ruling required
Sukuk-structured real-estate financing	May be exempt — case-by-case ZATCA ruling required

---

Section 2 — Required inputs & refusal catalogue

Required inputs

Before computing or declaring any Saudi RETT position, obtain:

1. Identity — seller (transferor) full legal name, ID type (Saudi national ID, Iqama, commercial registration), TIN / ZATCA account if registered.
2. Counterparty identity — buyer (transferee) full legal name, ID type, relationship to seller (for relative-gift / inheritance analysis).
3. Property data — full title deed number (صك), location (city, district, plot), area in m², classification (residential / commercial / industrial / agricultural / raw land).
4. Transaction documentation — signed sale-purchase agreement, agreed consideration in SAR, payment schedule, any non-cash consideration.
5. Fair market value evidence — independent valuation report where transaction value appears below market, or where the parties are connected.
6. First-home exemption evidence (if claimed) — Saudi national ID, declaration that this is the first owned home, prior property registry check.
7. Inheritance evidence (if claimed) — court-issued inheritance certificate (صك حصر الورثة) and probate documentation.
8. First-degree-relative gift evidence (if claimed) — civil-status documents confirming the parent/child/spouse relationship.
9. Notary appointment — the planned date and notary office for the title-deed transfer (RETT must be declared and paid BEFORE this appointment).

Refusal catalogue

STOP and do not produce a final RETT figure or filing where any of the following applies:

Trigger	Reason
Transaction value materially below comparable market evidence and no formal valuation has been obtained	ZATCA will substitute FMV — must obtain valuation first
Property situated outside the Kingdom of Saudi Arabia	RETT applies only to KSA-situs real estate; out of scope
Disposal pre-dates 1 October 2020	Pre-RETT regime (15% VAT or earlier treatment) — out of scope of this skill
Sukuk or sale-leaseback financing arrangement	Requires case-by-case ZATCA private ruling — out of scope of automated computation
Real estate held by a corporate group undergoing restructuring (merger, demerger, share-for-share)	Possible restructuring relief under ZATCA rules — requires specialist review
Mixed-use property where exempt-portion (e.g., partial first home) calculation is unclear	Obtain ZATCA pre-clearance or specialist sign-off
First-home exemption claimed but taxpayer's prior ownership history is unknown	Cannot confirm "first home" status; STOP until property registry checked
Long-term lease structure with optional extension clauses bringing aggregate term ≥ 50 years	Lease-classification analysis required; out of scope of automated computation
Non-Saudi-national party where foreign-ownership restrictions or GCC reciprocity rules may apply	Foreign-ownership overlay required; out of scope
Disposal in a Special Economic Zone (SEZ) or freezone with separate tax rules	SEZ-specific regime; out of scope

---

Section 3 — Tier 1 — taxable persons, taxable transactions, taxable value, exemptions

3.1 Taxable persons

RETT is imposed on the transferor (seller / disposer) of Saudi real estate. The transferor may be:

• A Saudi-national individual.
• A resident expatriate (Iqama holder).
• A non-resident individual disposing of KSA-situs real estate.
• A Saudi-registered company or establishment.
• A non-resident company disposing of KSA-situs real estate.
• A government entity (generally exempt — see §3.4) or public-benefit body (case-by-case).

Although the seller is the legal taxpayer, the buyer is typically the commercial bearer of the cost in Saudi market practice. The ZATCA RETT declaration is filed in the seller's name, but joint declarations and buyer-paid scenarios are common.

3.2 Taxable transactions

RETT is charged on any disposal of real estate, including:

• Sale — outright transfer of ownership for consideration.
• Exchange (barter) — each leg is a separate taxable disposal valued at FMV.
• Gift — taxable unless to a first-degree relative or otherwise exempt.
• Long-term lease ≥ 50 years — treated as a disposal under the Bylaws.
• Contribution of real estate to corporate capital in exchange for shares — taxable on FMV unless qualifying restructuring relief is granted.
• Transfer arising from a court order or judicial sale — taxable.
• Transfer of beneficial ownership via shell entity — anti-avoidance: ZATCA may look through to substance.

The following are NOT taxable disposals:

• Inheritance transfers (intestate or by will).
• Gifts between first-degree relatives (parent, child, spouse).
• Waqf (Islamic endowment) dedications.
• Transfers between government entities.
• Corrections of title deeds with no change of beneficial ownership.

3.3 Taxable value

The taxable value is the higher of:

1. The agreed transaction value (consideration stated in the sale-purchase agreement, inclusive of all monetary and non-monetary consideration), or
2. The fair market value (FMV) of the property at the date of the disposal.

Where ZATCA disputes the declared transaction value as being below market, it may require an independent valuation and assess RETT on the FMV.

For exchanges, each side of the exchange is valued at the FMV of the property given up, and each transferor declares RETT on its own leg.

For long-term leases ≥ 50 years, the taxable value is the aggregate of all consideration payable over the lease term (rent, premium, fees), discounted as required by ZATCA guidance.

3.4 Standard exemptions

The following disposals are exempt from RETT under the Bylaws:

Exemption	Conditions
Inheritance transfer	Court-issued inheritance certificate (صك حصر الورثة) required
Gift between first-degree relatives	Parent, child, spouse — documentary proof of relationship required
Waqf (endowment)	Properly registered with the General Authority for Awqaf
Transfer between government entities	Subject to administrative confirmation
Diplomatic missions	On reciprocal basis under Vienna Convention principles
Court-ordered partition among co-owners with no change in net ownership shares	Limited — requires documentary evidence
Forced expropriation by government for public benefit	Compensation transfer is exempt to the original owner
Transfers under a qualifying corporate restructuring	Mergers, demergers, group reorganisations — subject to ZATCA approval and clawback if conditions are breached within a holding period

3.5 Rate

The RETT rate is 5% of the taxable value. The rate is flat and does not vary by property class, value tier, or holding period.

---

Section 4 — Tier 2 — first-home exemption, inheritance, gifts, sale-leaseback, sukuk

4.1 First-home exemption for Saudi nationals

To support the Saudi Vision 2030 homeownership targets, the Council of Ministers introduced a RETT exemption for Saudi nationals purchasing their first home, capped at a value of property purchase price.

Cap: Up to SAR 1,000,000 of the purchase price is exempt. Verify the current cap with ZATCA at the time of filing — the cap has been adjusted by successive Council of Ministers resolutions since 2020 (initial cap was SAR 850,000; subsequently raised).

Conditions:

• Buyer must be a Saudi national (Saudi national ID required).
• The property must be the buyer's first owned residential property — verified against the General Real Estate Authority (GREA) and Ministry of Justice registries.
• The property must be a residential dwelling (not raw land, not commercial).
• The exemption applies only to the buyer's RETT economic share — the seller's legal liability is reduced to the extent of the cap (i.e., the first SAR 1,000,000 of consideration is exempt, the excess is taxable at 5%).
• The exemption is claimed via the ZATCA portal at the time of the RETT declaration, with the supporting documents uploaded.

Worked illustration: Saudi national first-time buyer purchases a residential villa for SAR 1,800,000. First SAR 1,000,000 is exempt. Residual SAR 800,000 × 5% = SAR 40,000 RETT.

4.2 Inheritance transfer

Transfer of real estate from a deceased estate to the heirs is exempt from RETT. The exemption applies whether the transfer is:

• Pursuant to a court-issued inheritance certificate (صك حصر الورثة) under Sharia inheritance rules, or
• Pursuant to a registered will (وصية) within the limits permitted under Saudi law.

The heirs' subsequent disposal of the inherited property to a third party is a fully taxable disposal at 5% RETT on the disposal value (no step-up reset of base — RETT is a transaction tax, not a gain tax).

4.3 Gift transfer between first-degree relatives

A gift of real estate between first-degree relatives is exempt. First-degree relatives are:

• Parent to child (and reciprocally).
• Spouse to spouse.

Gifts to siblings, grandparents, grandchildren, uncles, aunts, cousins, in-laws are NOT first-degree and are taxable at 5% on FMV (with anti-avoidance look-through if the gift is part of a connected arrangement).

The exemption requires the gift to be:

• Properly executed in a notarised gift deed (هبة).
• Supported by civil-status documents proving the relationship.
• Declared on the ZATCA portal with the exemption code, even though no RETT is payable.

4.4 Sale-and-leaseback arrangements

A sale-and-leaseback transaction — where the owner sells the property to a financier and immediately leases it back — has dual character. The sale leg is prima facie a taxable disposal at 5%.

However, where the structure is a genuine financing arrangement (e.g., the seller retains substantial use of the property, the leaseback term and pricing reflect financing economics, and the title is expected to revert), ZATCA may grant case-by-case exemption under the Bylaws on the basis that there is no real economic transfer.

Conservative default: assume RETT applies on the sale leg unless a written ZATCA ruling confirms otherwise.

4.5 Sukuk arrangements (Islamic financing)

Real estate transferred to a sukuk-issuer vehicle (typically an SPV) as part of a Sharia-compliant financing structure — common in KSA Islamic finance — may be exempt where:

• The transfer is to an SPV solely for sukuk issuance purposes.
• Beneficial ownership economically remains with the originator.
• The Bylaws or a specific ZATCA ruling confirm exemption for the structure.

Conservative default: assume RETT applies unless ZATCA pre-clearance has been obtained. The structure must be documented before the transfer to qualify.

4.6 Corporate restructuring relief

Transfers of real estate between members of a wholly-owned group in a qualifying restructuring (merger, demerger, share-for-property contribution where common control is maintained) may be exempt or deferred, subject to:

• ZATCA approval.
• A two-year holding period (or such other period as stipulated) post-restructuring — disposal outside the group within the holding period triggers clawback of the original RETT plus penalties.
• Documentation of the restructuring purpose and continuity-of-ownership analysis.

---

Section 5 — Worked examples

Example A — Sale of a commercial office building (corporate seller)

Facts. Riyadh-based LLC sells a commercial office tower in the Olaya district to an unrelated buyer on 12 March 2025 for an agreed price of SAR 45,000,000. An independent valuation supports the price as FMV.

Line item	Amount (SAR)
Agreed transaction value	45,000,000
FMV (per valuation)	45,000,000
Taxable value (higher of the two)	45,000,000
RETT at 5%	2,250,000

The LLC declares the disposal on the ZATCA portal on or before 11 March 2025 (the day prior to the notary appointment), pays SAR 2,250,000, and obtains the RETT clearance reference. The notary registers the title transfer on 12 March 2025 against the clearance reference. By commercial agreement, the buyer reimbursed the seller for the RETT cost in the sale-purchase agreement, but the legal declarant is the seller.

Example B — Sale of a second residential villa (Saudi national)

Facts. A Saudi national, already an owner of two prior properties, sells a residential villa in Jeddah to another Saudi national (who is also already a homeowner) on 10 July 2025 for SAR 3,200,000. Neither party qualifies for the first-home exemption.

Line item	Amount (SAR)
Agreed transaction value	3,200,000
FMV (no independent valuation obtained — value within market range)	3,200,000 (assumed)
Taxable value	3,200,000
RETT at 5%	160,000

Declaration filed on ZATCA portal in the seller's name; SAR 160,000 paid; clearance reference obtained; notary completes title transfer.

Example C — Inheritance followed by onward sale

Facts. Mr Al-Otaibi inherited a plot of land in Dammam from his late father on 5 January 2024 (inheritance certificate issued by the Sharia court). On 20 September 2025 he sells the plot to an unrelated buyer for SAR 800,000.

Step	Treatment
Step 1 — Inheritance transfer (Jan 2024)	Exempt from RETT (inheritance) — declared on ZATCA portal with inheritance certificate, no RETT payable
Step 2 — Onward sale (Sep 2025)	Fully taxable at 5%. Taxable value = SAR 800,000. RETT = SAR 40,000

The fact that the property was acquired by inheritance does NOT carry forward an exemption to the onward disposal. RETT is a transaction tax (not a capital-gains tax), so each disposal is assessed independently on its own taxable value.

---

Section 6 — Filing & payment

6.1 Declaration channel — ZATCA online portal

Every taxable real-estate transaction must be declared on the ZATCA online portal (Real Estate Transaction Tax module). The declaration is per-transaction; there is no periodic return for RETT (unlike VAT, which is filed monthly or quarterly).

The declaration requires:

• Seller (transferor) details — ID, TIN/ZATCA account.
• Buyer (transferee) details — ID.
• Title deed number (صك) and property description.
• Transaction value and any supporting valuation.
• Any exemption claimed, with documentary upload.

6.2 Timing — before notarisation

The RETT declaration and payment must be completed before the notarisation of the title transfer. The Ministry of Justice / notary office will not register the title transfer without a valid ZATCA RETT clearance reference number.

In practice:

1. Seller logs in to ZATCA portal and creates a RETT declaration.
2. Seller pays the computed RETT via SADAD (the national bill-payment system) or bank transfer.
3. ZATCA issues a clearance reference (electronic).
4. Seller / buyer present the clearance reference at the notary office.
5. Notary completes the title transfer in the Ministry of Justice e-system.

6.3 Legal liability

The seller (transferor) is the legal taxpayer under the Bylaws. Although market practice frequently shifts the economic burden to the buyer (and many sale-purchase agreements explicitly so provide), ZATCA's recourse for non-payment is against the legal seller — and against the buyer secondarily where the buyer paid the seller without verifying RETT clearance.

6.4 Records & retention

Both parties should retain:

• The signed sale-purchase agreement.
• The ZATCA RETT declaration confirmation and clearance reference.
• The SADAD payment receipt.
• The notarised title deed.
• Any valuation report supporting the declared value.
• Any exemption documentation (inheritance certificate, relationship documents, first-home declaration, restructuring approval).

Retention period: 6 years from the date of the transaction (general ZATCA records-retention requirement; longer if litigation is pending).

6.5 Penalties

Breach	Penalty
Late payment of RETT	5% of the unpaid RETT per month (or part-month) of delay
Failure to declare a taxable transaction	Failure-to-file fine plus 5%/month interest; risk of nullification of the title transfer
Under-declaration of taxable value	Assessment of the shortfall plus 5%/month interest, plus a tax-evasion penalty where ZATCA finds wilful conduct
Wrongful claim of exemption (e.g., false first-home declaration)	Recovery of the RETT plus 5%/month interest plus a wrongful-exemption penalty; potential criminal referral

---

Section 7 — Conservative defaults

Ambiguity	Default
Transaction value vs FMV uncertain — no independent valuation	Obtain valuation; if not obtained, ZATCA may impose FMV — STOP until valuation in hand
First-home exemption claimed but no Ministry of Justice prior-ownership check	Treat as NOT first home; pay full RETT pending verification (then file refund claim if confirmed)
First-home cap uncertain (rates have changed since 2020)	Apply the most recently confirmed cap of SAR 1,000,000 and explicitly flag the cap for reviewer verification with current ZATCA guidance
First-degree relationship documentation incomplete	Treat as non-first-degree; full 5% RETT applies pending civil-status proof
Inheritance certificate not yet issued	STOP — wait for Sharia court certificate before declaring exemption
Sale-leaseback, sukuk, or restructuring arrangement	Default to taxable at 5% pending written ZATCA private ruling
Long-term lease close to but not exceeding 50 years (e.g., 49-year lease with option to extend)	Apply 50-year-or-greater treatment defensively — RETT applies on aggregate consideration
Property of mixed residential / commercial character with first-home claim	Treat as not eligible for first-home exemption; full 5% RETT
Non-resident transferor with possible withholding issue	Buyer should withhold RETT and remit to ZATCA pending clarification
Disposal of beneficial interest via SPV shares (rather than direct title transfer)	Anti-avoidance — declare and pay 5% RETT on FMV; flag for specialist review
Transaction value materially below market	Treat as FMV at greater of agreed value and arm's-length comparable
Notary appointment within 48 hours and ZATCA portal unavailable	STOP and postpone the notary appointment — the title cannot lawfully transfer without RETT clearance

---

Section 8 — Sources

1. Royal Decree No. (A/84) dated 14/2/1442H (1 October 2020) — establishes RETT and exempts real-estate disposals from VAT.
2. Real Estate Transaction Tax Bylaws (RETT Bylaws) — issued by ZATCA pursuant to Royal Decree A/84; originally published October 2020, amended subsequently.
3. ZATCA Real Estate Transaction Tax Guideline — practitioner guideline published on the ZATCA website, covering declaration mechanics, exemptions, and penalties.
4. Council of Ministers Resolutions raising the Saudi-national first-home exemption cap (from the original SAR 850,000 to subsequent levels — verify currency of the cap at time of use).
5. VAT Implementing Regulations (KSA) — confirming the carve-out of real-estate disposals from VAT post 1 October 2020.
6. Ministry of Justice / Najiz portal — notarisation and title-deed registration system; integrated with ZATCA RETT clearance.
7. General Real Estate Authority (GREA / الهيئة العامة للعقار) — registry checks for first-home verification and property classification.
8. General Authority for Awqaf — registry for Waqf (endowment) exemptions.
9. Sharia Court inheritance certificates (صك حصر الورثة) — primary documentation for inheritance exemption.
10. ZATCA Information Circulars and FAQs on RETT — periodic clarifications on edge cases (sale-leaseback, sukuk, restructuring, mixed-use, non-resident sellers).
11. Saudi Vision 2030 Housing Programme documentation — policy context for the first-home exemption.
12. GAZT-era guidance (pre-merger) retained in archived form for transactions in the transitional 2020–2021 window when GAZT became ZATCA.

---

End of Skill — Saudi Arabia RETT v1.0

---

<!-- openaccountants-cta-block -->

Talk to a verified accountant

This skill is a tool, not an engagement. Every taxpayer's situation is different, and the rules in the skill may not match your specific facts.

To speak with one of the licensed accountants who verifies skills for your jurisdiction — no liability on either side until you and the accountant sign a formal engagement letter — book a free 30-minute call:

→ Book a call

We'll route you to the named verifier covering your country or state. You can also see the full list of verified accountants at openaccountants.com/network.