Aug 16, 2025
Before falling in love with a beachfront apartment or a quiet suburban villa, remember—the listed price isn’t the only cost you’ll pay. There’s always another expense hidden in the fine print… waiting for you at signing.
The question every foreign investor asks: What is the property tax for foreigners in Saudi Arabia?
The answer isn’t complicated, but it needs to be clear—because this tax, whether you're buying or selling, can completely reshape your financial calculations.
Whether you're researching buying property tax in Saudi Arabia for expats before making a purchase or want to know the real estate tax for non-Saudis when selling, you need the numbers upfront… so your dream investment doesn’t turn into an unexpected financial burden.
The real estate tax for non-Saudis—officially called the Real Estate Transaction Tax (RETT)—is a flat 5% levied on the value of any property ownership transfer: sale, compensated gift, or exchange. It’s not an annual tax but a one-time payment due at the transaction’s completion.
This tax doesn’t apply only to Saudis—it covers everyone, including foreigners, at the same rate and under the same rules. Whether you’re paying buying property tax in Saudi Arabia for expats when purchasing a home or covering the property selling tax when exiting an investment, the rule is the same: 5% of the transaction value.
The biggest change came in recent years when most residential property sales were excluded from VAT (15%), replaced by the simpler RETT (5%). Now, instead of an unexpected 15% VAT charge, you know upfront that only 5% applies upon ownership transfer.
Many buyers assume they must always pay the real estate tax for non-Saudis—but legally, the seller is the primary taxpayer, unless the contract states otherwise. This means if you're buying, the seller might cover the property selling tax, or you might bear it if agreed in writing.
As for timing? It’s straightforward. The buying property tax in Saudi Arabia for expats (or selling tax) is paid upon ownership transfer, whether processed digitally via the Ministry of Justice or through a notary office. The transaction cannot be finalized until the tax is paid in full.
That’s why it’s crucial to clarify who pays the tax and document it in the contract—so a last-minute surprise doesn’t derail your budget.
Calculating the real estate tax for non-Saudis isn’t complex—but you must know the formula:
Flat rate: 5% of the total transaction value (whether buying or selling).
Example: A villa priced at 2,000,000 SAR → Tax = 100,000 SAR.
Note: In some cases, the valuation may include extras (like parking spots or furnishings if listed in the contract). Always review details before signing to avoid unexpected tax additions.
Years ago, foreign buyers were shocked to find a 15% VAT applied to ready residential properties. But the rules have changed.
Today, most residential property sales are exempt from VAT, replaced by the 5% RETT (the standard property tax for foreigners). Whether paying buying property tax in Saudi Arabia for expats or property selling tax, the rate remains 5%.
However, VAT still applies to related services (construction, commercial property management, leases) but not to ready residential sales.
For non-Saudis, there’s no special higher tax—the real estate tax for non-Saudis is the same 5% applied to all.
Sometimes, theory isn’t enough—let’s see real examples:
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If you’re selling, the rules mirror buying:
Even if selling inherited property or transferring ownership, the 5% tax applies unless exempt under special regulations.
Some areas, like Makkah and Madinah, have stricter ownership rules for foreigners. Direct ownership is limited, but indirect investment (e.g., buying shares in a property-holding company) is possible.
In such cases:
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No, 5% RETT applies to all.
At ownership transfer (during final signing).
Typically the seller, unless the buyer agrees otherwise.
Only if specified in the contract.
Whether buying your dream home or selling an investment, the property tax for foreigners isn’t a minor detail—it’s a key cost factor. The rate is fixed (5%), but its impact depends on your contract terms.
Successful real estate decisions start with knowing the numbers before dreaming of locations or designs. If you want to move forward confidently, factor in the tax early—so it doesn’t surprise you later.
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