Understanding Saudi Real Estate Transaction Tax (RETT) and Foreign Transfer Fees

Buying property in Saudi Arabia is highly attractive due to the absence of annual property taxes. However, the entry costs are rigid. The primary financial hurdle for any buyer—local or foreign—is the Real Estate Transaction Tax (RETT). Furthermore, expats face specific administrative transfer fees. Understanding these exact numbers prevents severe budget miscalculations at the closing table.

The 5% RETT Explained

The RETT is a flat 5% tax levied on the total transaction value of a property. It replaced the 15% VAT on real estate sales, significantly stimulating the market. This tax applies to all land, commercial buildings, and residential properties.

Who pays it? Legally, the seller is responsible for remitting the RETT to the Zakat, Tax and Customs Authority (ZATCA). Practically, the cost is almost universally passed onto the buyer. The final sale price you negotiate will nearly always exclude this 5%; you must add it to your total capital requirement.

There are very few exemptions. The most notable exemption applies to a Saudi citizen buying their first home (up to a value of SAR 1 million, where the government covers the tax). This exemption does not apply to foreign buyers or expats.

Off-Plan Purchases and RETT

When you buy an off-plan property from a developer in projects like ROSHN or Jeddah Central, the 5% RETT still applies. Developers usually collect this upfront alongside your initial down payment.

Ensure your sales contract explicitly details who bears the RETT burden. In highly competitive premium developments, developers never absorb this cost. Factor it directly into your initial ROI calculations.

Hidden Fees for Foreign Buyers

Expats executing a property transfer face additional friction costs beyond the RETT. The physical transfer of the title deed requires registering the transaction with the Ministry of Justice via the Najiz portal.

If you are buying through a broker, expect a standard 2.5% agency commission. This is non-negotiable in established Riyadh neighborhoods. Additionally, if you require legal proxy representation (Wakala) to execute the sale while you are outside the Kingdom, notary and translation fees can add SAR 3,000 to SAR 5,000 to your closing costs.

The Bottom Line Calculation

If an expat buys a SAR 2,000,000 apartment in Riyadh, the true closing cost is not two million Riyals.

• Base Price: SAR 2,000,000
• RETT (5%): SAR 100,000
• Brokerage (2.5%): SAR 50,000
• Total Capital Required: SAR 2,150,000

Saudi Arabia remains a tax haven compared to Western markets, but entry friction is real. Capitalize your investment accurately before signing the MOU.