In brief
A 5% tax applies to real estate transactions regardless of the property's status, form or use at the time of disposal. It applies whether the disposal covers all or part of the property, a separate or an undivided share, completed, under-construction or off-plan property, and whether or not the transaction is notarized.
Article 2(a) is the charging rule. It is drafted to remove any argument about the type of property or the form of the transaction. If real estate in the Kingdom changes hands, permanently or through a usufruct of more than 50 years, 5% applies unless an exemption or a specific carve-out says otherwise.
The Provision: Exact Text
What It Means in Plain English
RETT at 5 percent applies to every real estate transaction in Saudi Arabia, whatever the property is or how it is used: land or buildings, whole or partial, finished or off-plan, notarized or informal. There is no minimum value and no rate band.
Breaking Down the Provision
| Phrase | Effect |
|---|---|
| “Regardless of the status, form, or use” | Residential, commercial, industrial, agricultural, vacant land: all taxed the same |
| “Entire real estate or a part of it” | A single unit, floor or plot within a larger property is taxable |
| “Separated or shared” | A divided part, or an undivided (common) share, is taxable |
| “Completed, under construction, off-plan, or otherwise” | Stage of completion does not matter. Off-plan timing follows Article 4(e) |
| “Notarized or not” | Informal deals are taxable. Article 4 sets their date |
What is a “real estate transaction”?
The term comes from the RETT Law. ZATCA’s Guideline describes it as any transaction that permanently transfers ownership of real estate or its benefit, directly or indirectly, or transfers its benefit for more than 50 years. Its examples include sale, gift or waiver, barter, finance lease, lease-to-own, ijarah ending in ownership, transfers of interests in real estate companies, and usufructs over 50 years.
ZATCA’s Position
- Example 1: land is sold for SAR 1,000,000 and taxed. The buyer subdivides it and sells each plot, and each sale is a new taxable transaction.
- Example 7: a commercial property worth SAR 800,000 is sold, and SAR 40,000 is due on or before notarization.
Worked Examples
| Transaction | Value | RETT |
|---|---|---|
| Sale of a vacant plot | SAR 3,000,000 | SAR 150,000 |
| Sale of a 25% undivided share in a building | SAR 2,500,000 | SAR 125,000 |
| Informal sale of a farm, with possession handed over | SAR 900,000 | SAR 45,000 (within 30 days of possession) |
| Off-plan apartment notarized at completion | SAR 1,400,000 | SAR 70,000 (first-home support may apply) |
What Takes a Transaction Out
The 5% applies unless:
- the transaction is outside scope under Article 2: subdivision and qualifying partition (2(k)), share transfers below 30% (2(i)), qualifying capital increases (2(j)), and the second leg of qualifying financing (2(l)); or
- an exemption in Article 3 applies; or
- first-home support covers it (the state bears RETT on up to SAR 1,000,000 for eligible citizens).
Common Mistakes
- Assuming informal deals are invisible. They are taxable and ZATCA can discover them.
- Assuming partial interests are exempt. They are within scope.
- Treating RETT as VAT. Real estate supplies are generally VAT-exempt and RETT-taxable. They are separate taxes.
The Bottom Line
Article 2(a) gives RETT its breadth: one rate, all property, all forms. Start from the assumption that 5% applies, then check the out-of-scope rules and exemptions that may take the transaction out.
Key takeaways
- RETT is a flat 5% on the total value of a real estate transaction. There are no bands or thresholds.
- It applies whatever the property's status, form or use: land, buildings, residential, commercial, agricultural or industrial.
- Disposals of part of a property, and of separate or undivided shares, are all within scope.
- Completed, under-construction and off-plan property are all covered. Off-plan sales are taxed at notarization.
- Notarization is not required. Informal transactions are taxable, with 30 days to pay under Article 5(B).
- Each transaction is taxed separately, so a property resold twice is taxed twice unless an exemption or the taxed-once rule in Article 2(l) applies.
Frequently asked questions
What is the RETT rate in Saudi Arabia?
5% of the total value of the real estate transaction, under Article 2(a) of the RETT Implementing Regulations. The rate is flat and applies to all property types and uses.
Is RETT due if the sale is not notarized?
Yes. Article 2(a) applies the tax whether or not the transaction is notarized. For non-notarized transactions, Article 4 sets the transaction date and Article 5(B) allows 30 days to pay.
Does RETT apply to selling a share in a property?
Yes. Disposals of part of a property, or of a separate or undivided (common) share, are within scope. Partition of jointly owned property can fall outside RETT under Article 2(k) if it matches the owners' shares and no consideration is paid.
Is RETT charged on the same property more than once?
Yes, on each separate transaction. ZATCA's Guideline gives the example of land sold, then subdivided and each plot resold, with each sale taxed. The exception is the taxed-once rule in Article 2(l) for qualifying financing structures.
Sources
- ZATCA — Real Estate Transaction Tax Law and Implementing Regulations
- ZATCA — Detailed Guideline for the Real Estate Transaction Tax (Version 6, May 2026)Sections 1.3 and 4.1; Examples 1 and 7
Based on the RETT Law (Royal Decree No. M/84, effective 10 April 2025), the RETT Implementing Regulations (ZATCA Board Resolution No. 01-03-25 dated 24 March 2025, unofficial English translation) and ZATCA's Detailed RETT Guideline Version 6 (May 2026). The Arabic text prevails. This article is general information, not advice on any specific transaction. dariba.co is an independent knowledge platform and is not affiliated with ZATCA.
