Ask most buyers in Saudi Arabia about the “first home exemption” and they will tell you it makes their purchase tax-free. That is half right, and the missing half is where people get caught. The first-home benefit is real, it is generous, and it has lifted RETT off hundreds of thousands of homes. But it is not an unlimited exemption, and — importantly — it is not even one of the statutory exemptions in Article 3 of the RETT Law.
Understanding what it actually is changes how you handle the paperwork, how you price a transaction, and whether you are exposed if eligibility is later questioned. Let’s break it down precisely.
What the First-Home Benefit Actually Is
The first-home benefit is a State-borne support, not an Article 3 exemption. The distinction is not pedantic. The Article 3 exemptions say a transaction is exempt — no tax arises. The first-home mechanism works differently: RETT does arise on the transaction, but the State bears it up to a defined ceiling on behalf of eligible Saudi citizens buying their first home.
ZATCA and the Ministry of Municipalities and Housing (MoMRAH) set this out in a joint mechanism. The headline numbers are simple:
| Portion of purchase price | Who bears RETT | Effective rate to buyer |
|---|---|---|
| First SAR 1,000,000 | The State | 0% |
| Any amount above SAR 1,000,000 | The transaction parties | 5% |
The policy sits squarely inside Vision 2030’s homeownership agenda. By absorbing the tax on the first million riyals of a first home, the State removes a meaningful cost from Saudi families entering the property market.
Who Qualifies
The benefit is aimed at Saudi citizens purchasing their first residential property. Eligibility is determined and verified through the Ministry of Municipalities and Housing, which issues the certificate that unlocks the support. ZATCA then re-checks eligibility when the transaction is processed through its portal.
Because eligibility is verified by a dedicated authority rather than self-declared, the practical questions that arise are usually about edge cases:
- Second homes: the benefit is for a first home. A buyer who already owns residential property is outside it.
- Joint purchases: where a property is bought jointly and one party already owns a home, eligibility can be partial or compromised — this is precisely the kind of fact ZATCA verifies.
- Non-residential property: the support is for a home. Commercial units, land held for investment, and buy-to-let purchases do not fit the policy.
Eligibility rules for the first-home support are administered by MoMRAH and are subject to its current criteria. Before pricing a deal on the assumption that the State will bear the RETT, confirm the buyer’s status through the Ministry’s portal and the issued certificate. This is an area where the position should be verified against the latest official guidance.
The Process — Step by Step
The first-home support runs across two portals and two authorities. The sequence matters, because the certificate has to exist before the seller can process the support side of the transaction.
- Buyer obtains the First Home certificate. The eligible buyer logs into the MoMRAH portal (housing.gov.sa) and obtains a “First Home” certificate confirming their entitlement to the State-borne support.
- Buyer provides the certificate to the seller. Because the seller (assignor) is the party legally responsible to ZATCA for RETT, the certificate has to reach them.
- Seller registers the transaction on the ZATCA portal. The seller logs into zatca.gov.sa, selects the RETT service, then “Request to Register a Real Estate Transaction,” and enters the property and buyer data.
- ZATCA verifies eligibility and applies the support. ZATCA confirms the buyer’s eligibility, exempts the tax on the first SAR 1,000,000, and imposes 5% on any amount above SAR 1,000,000.
- Transfer completes at the notary. Through the electronic link with the Ministry of Justice, the notary completes the transfer once the RETT position is settled.
Worked Examples — The Numbers That Matter
A Saudi national buys their first apartment for SAR 1,800,000.
RETT on the full price at 5% would be SAR 90,000. Under the first-home support:
- First SAR 1,000,000 → State bears the RETT (a value of SAR 50,000).
- Remaining SAR 800,000 → taxed at 5% = SAR 40,000.
RETT borne by the transaction parties: SAR 40,000, not SAR 90,000.
A Saudi national buys their first home for SAR 950,000 — entirely within the SAR 1,000,000 ceiling.
The State bears the full RETT. The parties pay SAR 0 of RETT. The transaction still has to be registered and processed; the support does not remove the registration step.
The same buyer, having used the support on their first home, later buys a second property for SAR 1,500,000. The first-home support does not apply. Full RETT of SAR 75,000 (5% × SAR 1,500,000) is due in the ordinary way.
Practical Traps
The first-home support is one of the smoother parts of the RETT system, but a few situations reliably cause problems.
- Off-plan timing. Where the home is purchased off-plan, the RETT due date and the timing of the certificate need to line up. Make sure the certificate is valid and presented at the point the transaction is processed.
- Joint ownership where one party already owns. Buying with a spouse or relative who already owns a home can reduce or remove the support on part of the purchase. Confirm before completion.
- Eligibility re-checked at ZATCA. The MoMRAH certificate is the gateway, but ZATCA independently verifies eligibility when it processes the transaction. A mismatch holds up the transfer.
- Joint liability risk. If ZATCA later establishes that eligibility conditions were not met on the transaction date, the buyer can be held jointly liable with the seller for the tax that should have been paid. The support is not a blank cheque.
Frequently Asked Questions
- The first-home benefit is a State-borne support, not an Article 3 statutory exemption — RETT arises, but the State bears it up to a ceiling.
- The State bears RETT on the first SAR 1,000,000 of an eligible Saudi first-time buyer’s home; 5% applies above that.
- The buyer obtains a First Home certificate from MoMRAH (housing.gov.sa) and provides it to the seller, who processes it through the ZATCA portal.
- The support is for first homes only — not second homes, buy-to-let, or commercial property.
- ZATCA re-verifies eligibility; if conditions were not met, the buyer can be jointly liable for the unpaid tax.
Also in this series
This article reflects the RETT Law (Royal Decree No. M/84), its Implementing Regulations (Board Resolution No. 01-03-25 dated 24 March 2025), and ZATCA’s Detailed RETT Guideline, together with the ZATCA–MoMRAH first-home mechanism. First-home eligibility is administered by the Ministry of Municipalities and Housing and is subject to its current criteria. This article is for informational purposes only and does not constitute legal or tax advice. Confirm any position with current ZATCA and MoMRAH guidance or a qualified Saudi tax advisor. dariba.co is an independent platform with no consulting relationships.
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