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Saudi Arabia has introduced several property taxes and fees that foreign investors and residents must understand before purchasing real estate. The Real Estate Transaction Tax (RETT) at 5% is the most significant cost, while the White Land Tax affects undeveloped properties at rates up to 10% annually.
Property buyers in Saudi Arabia face registration fees, VAT charges, utility connection costs, and brokerage commissions that can add substantial amounts to the total purchase price. Understanding these costs upfront helps investors make informed decisions about their Saudi real estate investments.
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Property transactions in Saudi Arabia incur a 5% Real Estate Transaction Tax, 15% VAT on new properties, and various registration and connection fees.
The White Land Tax charges 2.5% to 10% annually on undeveloped urban land, while ongoing property ownership has minimal recurring costs except for community maintenance fees.
| Tax/Fee Type | Rate/Amount | When It Applies |
|---|---|---|
| Real Estate Transaction Tax (RETT) | 5% of property value | All property transfers (exemptions available) |
| White Land Tax | 2.5% - 10% annually | Undeveloped urban land over 5,000 m² |
| Value Added Tax (VAT) | 15% | New properties and real estate services |
| Registration Fees | SAR 2,000 - 5,000 | Property ownership transfers |
| Real Estate Agent Commission | 2.5% of property price | When using licensed brokers |
| Electricity Connection | SAR 60 - 250 per KVA | New utility connections |
| RETT Late Penalties | 2% per month (max 50%) | Overdue RETT payments |
What is the Real Estate Transaction Tax in Saudi Arabia and how much does it cost?
The Real Estate Transaction Tax (RETT) in Saudi Arabia is a 5% tax applied to all property transfers based on the transaction value or fair market value, whichever is higher.
This tax applies to residential properties, commercial real estate, and land purchases throughout the Kingdom. As of September 2025, the RETT rate remains fixed at 5% for all property types, making it one of the most significant costs in Saudi real estate transactions.
The seller typically pays the RETT, but purchase contracts can specify that the buyer covers this cost instead. For a SAR 1 million property, the RETT amounts to SAR 50,000, which represents a substantial expense that must be factored into your total investment budget.
Payment must be made through the ZATCA platform (zatca.gov.sa), and the tax must be settled before the property transfer can be completed. Late payment incurs penalties of 2% per month, with a maximum penalty cap of 50% of the original tax amount.
Are there exemptions or discounts available on the Real Estate Transaction Tax?
Saudi Arabia offers several RETT exemptions that can significantly reduce property purchase costs for eligible buyers.
First-time Saudi homebuyers receive a complete exemption on the first SAR 1 million of their property purchase value. For properties valued above SAR 1 million, only the amount exceeding SAR 1 million is subject to the 5% RETT.
Immediate family transfers, including gifts and inheritance between spouses, parents, children, and siblings, are completely exempt from RETT. Charitable organizations, public utility transactions, corporate mergers and acquisitions, and court-ordered property sales also qualify for full exemptions.
To claim these exemptions, buyers must submit supporting documentation through the ZATCA platform and meet all specified eligibility criteria. The exemption approval process typically takes 5-10 business days once all required documents are submitted.
What is the White Land Tax and when does it apply to property owners?
The White Land Tax is an annual tax imposed on undeveloped urban land and long-vacant buildings within Saudi Arabia's serviced urban zones.
The standard White Land Tax rate is 2.5% of the land's assessed value per year, but this can increase up to 10% annually for properties that remain undeveloped for extended periods or are located in designated development priority areas.
This tax applies to vacant land plots exceeding 5,000 square meters within urban boundaries that have access to basic infrastructure services like roads, electricity, and water. As of 2025, the tax has been extended to include buildings that remain vacant for prolonged periods.
Property owners can request temporary suspension of the White Land Tax if they can demonstrate valid development obstacles, such as pending permits or legal disputes. The tax aims to encourage land development and reduce speculation in Saudi Arabia's urban real estate markets.
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Is there an annual property tax or recurring municipal fee for property ownership?
Saudi Arabia does not impose a general annual property tax on residential or commercial property ownership, apart from the White Land Tax on undeveloped land.
Property owners in Saudi Arabia are not required to pay recurring municipal taxes or annual property ownership fees to local governments. This represents a significant advantage compared to many other countries where annual property taxes can amount to 1-3% of property value.
However, some residential compounds and gated communities charge monthly or annual community service fees ranging from SAR 100 to SAR 1,000 per month, depending on the amenities provided. These fees cover maintenance of common areas, security services, landscaping, and shared facilities like swimming pools or gyms.
The absence of annual property taxes makes Saudi Arabia attractive for long-term property investment, as ongoing ownership costs remain relatively low once the initial purchase is completed.
What are the registration fees for property ownership transfers?
Property registration fees in Saudi Arabia range from SAR 2,000 to SAR 5,000, depending on the property's value and complexity of the transaction.
These fees cover the official registration of property ownership with the Real Estate General Authority (REGA) and local land registration offices. The registration process is mandatory for all property transfers and must be completed within 30 days of the purchase agreement.
Higher-value properties and commercial real estate typically incur fees at the upper end of this range, while standard residential purchases usually fall within the SAR 2,000 to SAR 3,000 range. Complex transactions involving multiple parties or special conditions may require additional documentation fees.
Most registration processes are now handled digitally through the Najiz platform, which has streamlined the procedure and reduced processing times to 3-5 business days for standard transactions.
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Are notary or legal documentation fees required during property purchases?
Saudi Arabia has largely digitized its property documentation process, significantly reducing traditional notary and legal documentation fees.
Most property transactions are now processed through the digital Najiz platform, where standard documentation fees are typically included in the overall registration costs. For straightforward residential purchases, additional notary fees are minimal or non-existent.
Complex transactions involving corporate buyers, multiple properties, or special contract terms may require additional legal documentation services, which can cost SAR 1,000 to SAR 5,000 depending on the complexity.
Foreign buyers may need additional document authentication and translation services, which typically cost SAR 500 to SAR 2,000 depending on the number of documents required and the complexity of the transaction.
What are the typical real estate agent commission fees in Saudi Arabia?
Real estate agent commission in Saudi Arabia is regulated at 2.5% of the property's sale or rental value.
This commission rate is set by Saudi real estate regulations and applies to all licensed real estate brokers operating in the Kingdom. The commission is typically paid by the party who engaged the agent's services, whether buyer or seller.
For a SAR 1 million property purchase, the brokerage commission amounts to SAR 25,000. Some agents may offer reduced commission rates for high-value transactions or repeat clients, but they cannot legally charge more than the 2.5% regulatory maximum.
Only licensed real estate brokers registered with the Real Estate General Authority (REGA) can legally charge these commissions. Working with unlicensed agents may result in legal complications and lack of consumer protection.
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Does Value Added Tax apply to property transactions and real estate services?
Value Added Tax (VAT) at 15% applies to most new property sales and real estate services in Saudi Arabia, but not to resale of used residential properties.
New residential and commercial properties are subject to 15% VAT, which is added to the purchase price. However, first-time homebuyers can receive VAT exemption on the first SAR 1 million of their property purchase if they meet eligibility requirements.
Resale of existing residential properties is exempt from VAT, making the secondary market more attractive for cost-conscious buyers. Real estate agent services, legal fees, property management services, and other real estate-related services are subject to the full 15% VAT rate.
For a new SAR 1 million property, VAT adds SAR 150,000 to the total cost, representing a significant additional expense that buyers must budget for when purchasing new developments.
What are the utility connection and infrastructure fees for new properties?
Electricity connection fees in Saudi Arabia range from SAR 60 to SAR 250 per KVA of the main electrical breaker capacity, plus ongoing monthly meter fees of SAR 10 to SAR 40.
Water and sewage connection fees vary by municipality and are typically handled through the National Water Company or local Baladi platforms. These connections generally cost SAR 500 to SAR 2,000 for standard residential properties, depending on the location and infrastructure requirements.
New large-scale developments may face additional infrastructure compliance fees or contribution requirements for road improvements, utilities expansion, or community services. These can range from SAR 10,000 to SAR 50,000 for major commercial or multi-unit residential projects.
Internet and telecommunications connections are typically free or low-cost (under SAR 200) and are handled directly with service providers like STC, Mobily, or Zain.
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Do homeowners pay ongoing community service or maintenance fees in residential complexes?
Residential compounds and gated communities in Saudi Arabia typically charge monthly or annual maintenance and service fees, but standalone properties generally do not have such requirements.
Community fees in residential complexes range from SAR 100 to SAR 1,000 per month, depending on the amenities and services provided. Luxury compounds with extensive facilities like swimming pools, gyms, landscaping, and 24-hour security typically charge higher fees.
These fees cover common area maintenance, security services, landscaping, waste management, and shared facility upkeep. Some communities also include utilities like water, electricity, or internet in their monthly service charges.
Community associations or management companies set these fees, and they can increase annually based on maintenance costs and inflation. Property buyers should factor these ongoing costs into their total ownership budget when considering compound properties.
Are there penalties or late fees for unpaid taxes and registration costs?
Saudi Arabia imposes significant penalties for late payment of property-related taxes and fees, with rates varying by the type of obligation.
RETT late payment penalties are charged at 2% per month of the unpaid tax amount, with a maximum penalty cap of 50% of the original tax due. For a SAR 50,000 RETT payment, monthly penalties can reach SAR 1,000, making timely payment essential.
General Saudi tax penalties for late registration or filing can include fixed fines of SAR 10,000 or more, plus late payment fines ranging from 5% to 25% of the tax due, depending on the length of the delay.
The government occasionally offers amnesty programs that waive penalties for voluntary compliance and payment. As of September 2025, such initiatives are available for taxpayers who proactively correct their obligations and settle outstanding amounts.
Property registration delays can also result in complications with ownership transfer, potentially affecting the buyer's legal rights to the property until all fees and penalties are settled.
What government websites provide official information about property taxes and fees?
Several official Saudi government websites publish authoritative information about property taxes, fees, and regulations that buyers can access directly.
| Authority | Website | Information Provided |
|---|---|---|
| Zakat, Tax and Customs Authority (ZATCA) | zatca.gov.sa | RETT, VAT, White Land Tax rates and procedures |
| Real Estate General Authority (REGA) | rega.gov.sa | Property registration, brokerage regulations, licensing |
| Ministry of Municipal and Rural Affairs | momah.gov.sa | Municipal regulations, service fees, development guidelines |
| Saudi Electricity Company (SEC) | se.com.sa | Utility connection fees and tariff schedules |
| National Water Company | nwc.com.sa | Water and sewage connection fees by region |
| Najiz Digital Platform | najiz.sa | Property registration services and documentation |
| Baladi Municipal Platform | balady.gov.sa | Local municipal services and fees |
These websites provide up-to-date fee schedules, tax calculators, and step-by-step guides for property transactions. All official information is available in both Arabic and English to assist foreign investors.
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Conclusion
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.
Understanding Saudi Arabia's property taxes and fees is crucial for making informed real estate investment decisions in the Kingdom.
With the 5% RETT, potential VAT charges, and various connection fees, total transaction costs can add 10-25% to your property purchase price, making careful budgeting essential for successful investments.
Sources
- Real Estate Saudi - RETT Guide
- BCLP Law - White Land Tax Update
- Sands of Wealth - Foreign Real Estate Law
- Multilaw - Saudi Real Estate Guide
- Real Estate Saudi - VAT Guide
- Saudi Electricity Company - Connection Services
- Ministry of Municipal and Rural Affairs
- MOMAH - First-Time Buyer Benefits
- PwC - RETT Regulations
- ZATCA Official Website