MULKIYA · GUIDES
The 5% Transaction Tax: Who Actually Pays It
Reviewed against the official register · Updated 2026-07-30
The 5% Real Estate Transaction Tax is legally the seller's liability, yet buyers usually fund it. Here is who pays, when it falls due, and what is exempt.
What the tax is
Every property transfer in Saudi Arabia carries a 5% Real Estate Transaction Tax, charged on the price. The tax comes from the RETT law, Royal Decree M/84, in force since 10-04-2025, and ZATCA administers it. It applies to a resale apartment and to a new unit bought from a developer alike, and it applies at the same 5% whatever the buyer's nationality. There is no reduced rate for Saudis and no surcharge for foreigners at purchase.
Who the law binds: the seller
In law the tax is the seller's liability. The seller is the transferor, and the tax authority looks to the transferor. A clause in the sale contract can say the buyer will fund the tax, but that clause moves money between the parties; it does not move the liability. If the tax is not settled, the transfer does not complete. When you read a contract, read the tax line as part of the price, because that is what it is.
Who pays in practice: usually you
In practice the 5% is commonly priced into the deal. Sellers quote a price that leaves them whole after the tax, or they state plainly that the buyer covers it. Either way the buyer funds it at settlement. So budget it as your cost from the first conversation, and ask before you sign how the contract allocates it. Two buyers of the same apartment, one Saudi and one foreign, face the same 5%. The charge specific to a foreign owner arrives later, at sale: a 2% disposal fee, covered separately.
When it falls due, and how it settles
The tax is due at the transfer itself. It is collected inside the official settlement flow at registration, so there is no separate payment to arrange, no installment plan and no deferral. Settlement moves through official electronic channels, and registration in the official real-estate registry is the validity condition of the acquisition. The practical sequence is simple: the price and the tax settle together, and only then does the transfer register.
What is exempt
At category level, the law keeps some transfers outside the charge. Inheritance is not a taxed transfer, and court-ordered transfers are exempt under the ruleset. These categories are fixed by law, not negotiated. There is no structure that converts a taxable sale into an exempt transfer. Treat any scheme that promises one as a false promise, and plan the 5% into every ordinary purchase and sale.
A worked example, and the honest next step
On a SAR 2 million purchase, the 5% tax is SAR 100,000, funded by the buyer through the deal price in the common case. Years later the same owner sells at SAR 2.4 million. Now the owner is the transferor, and the 5% on the sale is SAR 120,000. Same tax, same rate, different side of the table. Mulkiya is not the seller and not the broker, and it takes no commission. The honest first step is the eligibility check: seven questions about your status and your target property, answered by a deterministic rules engine against Royal Decree M/14 and the current ruleset.
Who pays the 5% tax, the buyer or the seller?
Legally the seller, who is the transferor in the deal. In practice the tax is commonly priced into the deal, so the buyer funds it at settlement. The contract can allocate the cost to the buyer, but it cannot move the legal liability.
Do foreigners pay a higher rate than Saudis?
No. The 5% applies to the transaction whatever the buyer's nationality. The charge specific to a foreign owner comes at sale: a 2% disposal fee in the designated cities, which is a separate instrument.
When exactly is the tax due?
At the transfer. It settles inside the official settlement flow at registration, together with the price, and the transfer does not complete without it. There is no way to defer it.
Is any transfer exempt from the 5%?
Yes, at category level. Inheritance sits outside the charge and court-ordered transfers are exempt. The categories are fixed by law; an ordinary purchase or sale is always taxed at 5%.
Can the buyer and seller agree to split the tax?
They can split the funding in the contract, and sellers often state that the buyer covers the full 5%. What they cannot split is the liability, which stays with the seller as transferor. Ask before you sign.