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SUMMARY
Foreign Saudi property buyers can currently face a 7% tax-and-fee stack in Riyadh, Jeddah, Makkah and Madinah: 5% Real Estate Transaction Tax plus a 2% REGA fee on covered non-Saudi transactions. But 7% is not a universal foreign-buyer tax, and it is not necessarily the amount the buyer personally pays.
The biggest practical distinction is between the legal tax bill and the buyer’s cash bill. RETT is primarily imposed on the person disposing of the property, usually the seller, even though a sale contract can shift that economic cost to the buyer.
The new 2% foreign-ownership fee is geographically concentrated. It applies in Riyadh, Jeddah, Makkah and Madinah under the current implementing regulations, while qualifying non-Saudi dispositions outside those Article 9 locations are currently zero-rated for that REGA fee.
That means two foreign buyers can purchase similarly priced Saudi properties and face different government charges simply because of location. On a SAR 4 million property, the 2% difference alone is SAR 80,000.
Residency helps with ownership eligibility, not with turning a foreign buyer into a Saudi buyer for fee purposes. A resident non-Saudi has broader ownership routes, including one personal residence outside designated zones in most of the country, but an iqama does not automatically remove the 2% fee where it applies.
The 5% RETT should not be confused with VAT. Ordinary property sales moved away from the previous 15% VAT treatment when RETT was introduced, although VAT can still show up on taxable professional and transaction-related services.
Off-plan purchases do not automatically escape RETT either. A developer payment plan may spread the purchase price over years, but it does not by itself erase the transaction tax or the foreign-ownership fee that applies to the underlying deal.
Brokerage can be as important as tax. If a foreign buyer funds the 5% RETT, owes the 2% REGA fee and is also the party responsible for a 2.5% brokerage commission, closing-related costs can reach about 9.5% of the property value before legal, financing or other service costs.
The Saudi cost structure is also more front-loaded than in countries with broad annual residential property taxes. A normal completed apartment does not currently face a universal yearly percentage-of-value property tax, although undeveloped land can fall under the much more aggressive White Land Fees regime.
The useful budgeting approach is therefore scenario-based rather than headline-based. In one covered transaction the buyer may mainly face the 2% REGA fee; in another, the contract can push RETT and brokerage onto the buyer and take the effective cash burden close to 10%.
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Do foreign Saudi property buyers really pay 7% now?
Foreign property buyers in Saudi Arabia can currently face a 7% combination of tax and regulatory fees in Riyadh, Jeddah, Makkah and Madinah, but 7% is not a universal foreign-buyer tax across the whole country.
Saudi Arabia's Real Estate Transaction Tax, or RETT, is 5% of the value of a taxable property transfer. That rule applies to Saudi real-estate transactions generally and was reaffirmed under the RETT law that replaced the older implementing framework.
The newer piece is the foreign-ownership fee. The implementing regulations for Saudi Arabia's Non-Saudi Real Estate Ownership Law now set that fee at 2% for all types of real-estate rights and all property uses in Riyadh, Jeddah, Makkah and Madinah.
The wording is unusually broad. In those four markets, the 2% rate is not limited to luxury homes, investment properties or a narrow category of foreigners. The regulation covers all real-estate rights and uses falling inside the designated geographic scope.
Put the two percentages together and a SAR 2 million transaction can involve SAR 100,000 of RETT plus SAR 40,000 of foreign-owner fee. That gives us SAR 140,000, or 7% of the property's value, before brokerage or other transaction costs.
The important caveat is who actually funds the 5% RETT. Saudi tax law places the primary RETT obligation on the person disposing of the property, usually the seller, while contracts can shift that economic cost to the buyer. We therefore should not assume that every foreign purchaser personally writes checks equal to the full 7%.
| Property value | 5% RETT | 2% foreign fee | Combined 7% |
|---|---|---|---|
| SAR 1 million | SAR 50,000 | SAR 20,000 | SAR 70,000 |
| SAR 2 million | SAR 100,000 | SAR 40,000 | SAR 140,000 |
| SAR 5 million | SAR 250,000 | SAR 100,000 | SAR 350,000 |
| SAR 10 million | SAR 500,000 | SAR 200,000 | SAR 700,000 |
Why has the tax question become more important for foreign buyers?
Saudi property taxes matter more to foreigners now because the country has opened a much clearer legal route to property ownership while adding a specific fee to some foreign-owned transactions.
The Non-Saudi Real Estate Ownership Law entered into force earlier this year. REGA now accepts applications through the Saudi Properties platform from Saudi residents, non-residents and qualifying foreign entities.
Non-resident individuals have their own procedural route. The implementing regulations require them to obtain an approved Saudi digital identity, open a Saudi bank account in their own name and obtain a Saudi telephone number linked to that identity.
This is a meaningful break from the old ownership environment. Saudi Arabia is making foreign ownership easier to execute through a formal digital system and designated geographic zones.
At the same time, the implementing regulations introduced a 2% fee on non-Saudi property dispositions in the country's four most obvious international residential markets: Riyadh, Jeddah, Makkah and Madinah.
So today's foreign buyer has more access than before, but the transaction-cost calculation has picked up another layer.
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Is Saudi Arabia's 5% property tax actually paid by the buyer?
Saudi Arabia's 5% RETT is legally tied first to the seller, although a foreign buyer can still end up paying the full economic cost if the sale contract says so.
That distinction can change the buyer's budget a lot. Under ZATCA's RETT framework, the person disposing of the property is the taxpayer primarily responsible for the tax. In a normal sale, that means the seller.
Saudi rules nevertheless allow the contract to allocate the RETT cost to the buyer. The tax does not vanish simply because the parties change who funds it.
Imagine a SAR 3 million Riyadh apartment. The 5% RETT equals SAR 150,000. If the seller bears that amount, the buyer may never experience the SAR 150,000 as an extra acquisition payment. If the purchase agreement makes the buyer bear it, the same apartment effectively costs the buyer SAR 3.15 million before the separate foreign fee and other expenses.
This is one of the biggest sources of confusion in Saudi property listings. The advertised property price tells us almost nothing about who will eventually absorb the RETT.
A buyer comparing two SAR 3 million apartments can therefore face materially different closing bills even though the purchase prices look identical.
| SAR 3 million purchase | Seller bears RETT | Buyer bears RETT |
|---|---|---|
| Agreed property price | SAR 3,000,000 | SAR 3,000,000 |
| 5% RETT funded by buyer | SAR 0 | SAR 150,000 |
| Buyer cost before foreign fee and brokerage | SAR 3,000,000 | SAR 3,150,000 |
| Extra buyer cash from RETT allocation | SAR 0 | SAR 150,000 |
Where does the extra 2% Saudi foreign-buyer fee apply?
The extra 2% foreign-property fee currently applies to covered non-Saudi transactions in Riyadh, Jeddah, Makkah and Madinah.
The latest implementing regulations are quite explicit. Article 9 sets a 2% REGA fee for Riyadh, Makkah, Madinah and Jeddah, covering all types of real-estate rights and all uses within the relevant geographic scope.
Article 10 then gives a 0% rate to non-Saudi dispositions elsewhere, unless another specified rule applies. That makes location unusually important when calculating foreign transaction costs.
A foreigner buying inside an eligible zone in Riyadh can therefore encounter the 2% fee. A qualifying foreign purchase somewhere outside those four Article 9 locations can have a 0% REGA fee instead.
Ownership eligibility still comes first. Saudi Arabia has geographic limits on where different categories of foreigners can acquire property. A non-resident cannot simply choose an arbitrary lower-fee city because the tax looks cheaper.
Resident foreigners have broader rights in one important respect. A legally resident non-Saudi individual may own one residential property outside the designated geographic scope, except in Makkah and Madinah, subject to the ownership law.
The geographic difference is large enough to affect investment maths. On a SAR 4 million property, 2% equals SAR 80,000.
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Is Saudi Arabia's 2% foreign-property charge really another tax?
Saudi Arabia's 2% charge is formally a REGA fee on non-Saudi real-estate dispositions, while the 5% RETT remains the country's separate transaction tax.
That legal distinction explains why both charges can sit on the same property transaction.
The Non-Saudi Real Estate Ownership Law gave REGA authority to impose a fee of up to 5% of the value of a non-Saudi real-estate disposition. The implementing regulations have now fixed the applicable rate at 2% in Riyadh, Jeddah, Makkah and Madinah.
ZATCA separately administers the 5% RETT.
For a buyer trying to work out how much cash a transaction consumes, the labels are less important than the combined amount. For exemptions, enforcement and future regulatory changes, they matter a lot because the charges come from two separate legal systems.
That is why “Saudi Arabia introduced a 7% foreign buyer tax” is imprecise. Some foreign transactions now combine a 5% tax with a 2% REGA fee.
| Charge | Current rate | Administered by | What triggers it |
|---|---|---|---|
| Real Estate Transaction Tax | 5% | ZATCA | Taxable Saudi real-estate disposition |
| Non-Saudi ownership fee | 2% | REGA | Covered non-Saudi dispositions in Riyadh, Jeddah, Makkah and Madinah |
| REGA fee outside Article 9 locations | 0% | REGA | Qualifying non-Saudi dispositions outside those locations |
| Headline combined rate where both apply | 7% | ZATCA + REGA | Same transaction can fall under both systems |
Do foreign buyers outside Riyadh and Jeddah pay less?
Foreign buyers can face a lower fee stack outside Riyadh, Jeddah, Makkah and Madinah because the new REGA fee is currently zero-rated outside the locations listed in Article 9.
The difference is meaningful. A SAR 5 million covered purchase in Riyadh produces a SAR 100,000 foreign-owner fee at 2%. The equivalent qualifying transaction outside the Article 9 locations would produce no REGA fee under the current implementing regulation.
The 5% RETT framework still exists, so a zero REGA fee does not make the property transfer tax-free.
There is also a practical limit to exploiting that difference. Saudi ownership rules determine which foreign buyers can own what and where.
A Saudi resident who is not a Saudi national may own one residential property outside the designated geographic zones, except in Makkah and Madinah. Non-residents generally depend much more heavily on the designated-zone framework.
So we cannot look at the 0% REGA rate in isolation. For many non-residents, the places where ownership is easiest are precisely the large cities where the 2% fee has been imposed.
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Does Saudi VAT add another 15% to a foreign property purchase?
Foreigners buying Saudi residential property should not add 15% VAT to the property's sale price on top of the 5% RETT.
Saudi Arabia moved real-estate sales away from the previous VAT treatment when RETT was introduced. ZATCA's current framework places ordinary real-estate disposals under the 5% transaction-tax regime instead.
That single distinction prevents one of the biggest possible calculation errors.
On a SAR 2 million apartment, adding 15% VAT would mean another SAR 300,000. Someone who then added 5% RETT and the newer 2% foreign fee would calculate SAR 440,000 of tax and fees before anything else. That is not how an ordinary residential sale is currently treated.
VAT can still appear around the transaction through taxable services. Professional services, for example, can have their own VAT treatment.
But the property itself should not simply be priced as purchase price + 15% VAT + 5% RETT + 2% foreign fee.
Can foreign buyers get Saudi Arabia's first-home RETT support?
Foreign property buyers generally cannot rely on Saudi Arabia's first-home RETT support because that relief is aimed at eligible Saudi citizens.
The program covers RETT associated with up to SAR 1 million of the value of a qualifying first home for eligible citizens.
That can create a surprisingly large gap between two buyers purchasing similarly priced homes.
At SAR 1 million, a 5% RETT amount is SAR 50,000. An eligible Saudi first-home purchaser can benefit from state support against that amount. A foreign purchaser should budget without assuming the same benefit.
The difference becomes especially visible now that foreign buyers in the four 2% fee markets may also have the separate REGA charge.
So two buyers looking at the same SAR 1 million property can begin with very different effective transaction costs despite the headline RETT rate being the same.
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Do off-plan Saudi properties escape the 5% RETT?
Buying Saudi property off-plan does not generally remove the 5% RETT.
ZATCA has specifically dealt with off-plan sales in its RETT rules, including the timing of when tax must be paid relative to notarisation or legally recognised certification.
The newer foreign-ownership regulations contain some zero-rated REGA cases involving development activity and subsequent sales, but those provisions should not be read as a general tax holiday for anyone buying an unfinished apartment from a developer.
This matters because off-plan marketing usually emphasises the payment plan: 10% now, instalments during construction, perhaps a large final payment at handover.
Those percentages describe how the property price is paid. They do not automatically describe the complete transaction cost.
A foreign buyer comparing a ready apartment with an off-plan unit therefore needs the tax calculation alongside the developer's instalment schedule.
Do expensive Saudi homes get taxed at a higher rate?
Saudi property transaction taxes are currently proportional, so a SAR 10 million home attracts a bigger riyal bill than a SAR 1 million home without moving into a higher RETT bracket.
The 5% RETT stays 5%. In the four covered foreign-owner markets, the REGA fee stays 2%.
The arithmetic is simple. The amounts can get large very quickly.
A SAR 750,000 transaction corresponds to SAR 37,500 at 5%. At SAR 10 million, the same percentage produces SAR 500,000.
Add the 2% foreign fee in a covered transaction and that SAR 10 million property generates another SAR 200,000.
Saudi rules also prevent buyers from treating an artificially low contract value as an easy tax workaround. ZATCA's framework links the taxable value to the transaction while protecting against values below the property's fair market level.
| Property value | RETT at 5% | Foreign fee at 2% | Combined amount |
|---|---|---|---|
| SAR 750,000 | SAR 37,500 | SAR 15,000 | SAR 52,500 |
| SAR 1.5 million | SAR 75,000 | SAR 30,000 | SAR 105,000 |
| SAR 3 million | SAR 150,000 | SAR 60,000 | SAR 210,000 |
| SAR 10 million | SAR 500,000 | SAR 200,000 | SAR 700,000 |
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Can brokerage push a foreign buyer's Saudi closing cost close to 10%?
Yes. A foreign buyer who ends up funding RETT, the 2% foreign fee and a full 2.5% brokerage commission can reach roughly 9.5% of the property's value before legal, financing or other service costs.
Saudi Arabia's Real Estate Brokerage Law sets the normal sale commission at 2.5% of the transaction amount unless the parties agree otherwise in writing.
The law also tells us who should pay it: the party that contracted with the broker.
So 2.5% should never be automatically added to every buyer's bill. It belongs in the calculation when the buyer has the relevant brokerage obligation.
Take a SAR 2 million Riyadh property. RETT is SAR 100,000. The 2% non-Saudi fee adds SAR 40,000. A 2.5% brokerage commission equals SAR 50,000.
If the buyer bears all three, the transaction-related bill reaches SAR 190,000, equivalent to 9.5% of the purchase price.
That is more useful than saying that “Saudi property tax is 7%.” For some buyers, the true cash requirement is lower. For others, it can be substantially higher.
| SAR 2 million purchase cost | Rate | Amount | Does the buyer always pay it? |
|---|---|---|---|
| RETT | 5% | SAR 100,000 | No |
| Foreign-owner fee | 2% | SAR 40,000 | Applies to covered non-Saudi transaction |
| Standard brokerage commission | 2.5% | SAR 50,000 | Depends on brokerage contract |
| Possible combined buyer cost | 9.5% | SAR 190,000 | Only if buyer bears all three |
Does being a Saudi resident remove the foreign-buyer fee?
Saudi residency expands a foreigner's property-ownership options, but residency by itself does not turn a non-Saudi buyer into a Saudi buyer for the new ownership rules.
This difference is easy to miss because residency matters a lot for eligibility.
Under the current law, a legally resident non-Saudi individual can own one property for personal residence outside the designated geographic scope, except in Makkah and Madinah.
Inside the designated zones, resident foreigners can also use the broader foreign-ownership framework.
Non-residents face a different process and need the approved digital identity, Saudi bank account and Saudi telephone number required by the implementing regulations.
The fee calculation still follows the property transaction and the applicable geographic rules. Holding an iqama does not automatically erase the 2% REGA fee where that fee applies.
Residency therefore gives a buyer more places and pathways through which ownership can be legal. It should not be treated as a general tax exemption.
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Are Makkah and Madinah more expensive for foreign buyers?
Makkah and Madinah currently use the same 2% foreign-owner fee as Riyadh and Jeddah, but the real difference is much stricter ownership eligibility.
The implementing regulations place all four markets under the same 2% Article 9 fee.
For individual foreign buyers, however, Saudi law restricts ownership rights in Makkah and Madinah to Muslims within the applicable geographic framework.
That makes the two holy cities fundamentally different from an ordinary comparison between Riyadh and Jeddah.
A buyer who qualifies can still face the same basic 5% RETT plus 2% REGA arithmetic. A buyer who does not qualify cannot solve the problem by accepting a higher tax bill.
This is why comparing Saudi cities purely through transaction-cost percentages can be misleading. The 2% number may be identical while the legal ability to purchase is very different.
Does a foreign owner pay annual property tax after buying in Saudi Arabia?
An ordinary completed Saudi apartment does not currently face a broad annual percentage-of-value property tax resembling the recurring residential property taxes common in some Western countries.
That makes Saudi Arabia's cost structure relatively front-loaded for many apartment buyers: acquisition costs can be significant, while there is no universal annual tax charging every homeowner a fixed percentage of the home's market value.
Saudi Arabia does have a much more aggressive tax-and-fee regime aimed at undeveloped or underused real estate.
The White Land Fees system has been expanded, and in Riyadh the highest-priority undeveloped land tier can now face an annual charge of up to 10% of land value. Lower tiers can face 7.5%, 5% or 2.5%.
Those percentages sound dramatic next to a residential transaction tax, but they apply to a very different type of property problem. A foreigner buying a normal completed apartment should not assume that a 10% annual white-land charge will suddenly be levied on the unit.
For investors buying large undeveloped sites, though, the distinction is crucial. The recurring holding cost can completely change the investment case.
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How much extra cash should a foreign buyer actually keep for a Saudi purchase?
A foreign buyer in Riyadh, Jeddah, Makkah or Madinah should currently model several possible closing-cost outcomes instead of using one universal percentage.
At the low end, the seller may bear the 5% RETT while the buyer only encounters the 2% foreign fee among the major percentage charges discussed here.
At the other end, the sale contract can make the buyer fund the 5% RETT, the 2% REGA fee can apply, and the buyer may also owe the broker a 2.5% commission.
On a SAR 4 million property, those scenarios are far apart.
The 2% foreign fee alone equals SAR 80,000. Add RETT and the buyer-funded amount reaches SAR 280,000. Add a 2.5% buyer-side brokerage commission and it reaches SAR 380,000.
That is a SAR 300,000 difference between the lighter and heavier scenarios on exactly the same SAR 4 million purchase.
The contract therefore matters almost as much as the published tax rates. A buyer who negotiates SAR 100,000 off the property but casually accepts a SAR 200,000 RETT obligation has not necessarily improved the deal.
| SAR 4 million purchase scenario | Buyer-funded amount | Share of property value | What creates the difference |
|---|---|---|---|
| 2% foreign fee | SAR 80,000 | 2.0% | Seller bears RETT; no buyer brokerage assumed |
| Foreign fee + RETT | SAR 280,000 | 7.0% | Buyer also funds 5% RETT |
| Foreign fee + brokerage | SAR 180,000 | 4.5% | Buyer pays 2% fee and 2.5% broker commission |
| Foreign fee + RETT + brokerage | SAR 380,000 | 9.5% | Buyer bears all three |
So how much tax do foreign Saudi property buyers pay today?
Foreign Saudi property buyers can currently face a 7% tax-and-fee stack in Riyadh, Jeddah, Makkah and Madinah, although the amount the buyer personally pays can range materially below or above 7% depending on the contract and brokerage arrangement.
The underlying national RETT rate is 5%. ZATCA's current rules keep that rate in place for taxable real-estate dispositions.
The newer foreign-ownership regulations add a 2% REGA fee for non-Saudi transactions in the designated geographic scope of Riyadh, Jeddah, Makkah and Madinah. Outside the locations covered by Article 9, the same REGA fee is currently zero-rated.
So 7% is the right headline figure for a covered transaction when we are describing the two government charges together.
It still does not tell us exactly how much cash a buyer needs.
The seller is the primary RETT taxpayer under the Saudi framework, although the purchase contract can shift the economic burden to the buyer. A standard brokerage commission can add another 2.5% when the buyer is the party responsible for paying the broker.
For a SAR 2 million property, 5% represents SAR 100,000. The extra 2% represents SAR 40,000. A 2.5% commission represents another SAR 50,000.
A buyer funding all three would therefore spend SAR 190,000 above the property price, roughly 9.5%. If the seller bears RETT and the buyer has no brokerage obligation, the major percentage charge discussed here could be only SAR 40,000, or 2%, in a covered foreign-owner transaction.
The sharp answer is that Saudi Arabia currently has a 5% RETT and an additional 2% fee for covered foreign-property transactions in its four main regulated cities. For a foreign buyer, 7% is the useful headline number, while the actual closing bill can approach 10% when the contract also pushes RETT and brokerage onto the buyer.
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OUR METHODOLOGY
We treated this as a regulatory and transaction-cost question rather than a headline-rate question. The analysis separates the national transaction tax, rules specific to non-Saudi ownership, geographic differences, contractual allocation of costs and charges around the purchase that are not themselves property taxes.
We used the rules in force as of 17 September 2026 and prioritized Saudi primary sources: laws and implementing regulations first, then guidance from the authority responsible for applying them. The core sources are REGA, ZATCA, the Saudi Official Gazette, Sakani and the Ministry of Municipalities and Housing.
We tested the 5% RETT and the non-Saudi ownership fee independently before combining them. That avoids treating 7% as a universal foreign-buyer tax when the 2% REGA fee depends on the geographic scope of the current non-Saudi ownership regulations.
We also separated legal liability from economic cost. ZATCA's current guidance identifies the disposer as the person primarily responsible for RETT, while a sale contract can still shift the economic burden to the buyer. The same approach is used for brokerage: the normal 2.5% commission is included in buyer scenarios only where the buyer is the party responsible for it under the brokerage arrangement.
VAT, off-plan property, first-home support, residency and White Land Fees were checked separately so that a rule applying to one type of transaction or property was not carried into another. We rebuilt the numerical examples directly from the published rates and used scenario analysis where contracts can produce different buyer cash requirements.
Key sources include REGA's Law of Real Estate Ownership by Non-Saudis, the Saudi Official Gazette's implementing regulations, REGA's notice on the new ownership system entering into force, ZATCA's Real Estate Transaction Tax Law page, and ZATCA's detailed RETT guideline.
For the surrounding cost questions, we also used ZATCA's guidance on VAT exemption for real-estate supplies, Sakani's first-home RETT support service, REGA's Real Estate Brokerage Law, and the Ministry of Municipalities and Housing's current White Land Fees regulations and Riyadh fee-zone guidance.
Buying real estate in Saudi Arabia can be risky
An increasing number of foreign investors are showing interest. However, 90% of them will make mistakes. Avoid the pitfalls with our comprehensive guide.
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