MULKIYA · GUIDES
VAT and Property: Where the 15% Touches a Saudi Purchase
Reviewed against the official register · Updated 2026-07-30
VAT in a Saudi home purchase sits on the brokerage commission at 15%, never on the sale price. The price itself carries a separate 5% transaction tax.
The price itself carries no VAT
At category level, a residential sale price in Saudi Arabia sits outside VAT. The tax that does attach to the price is the 5% Real Estate Transaction Tax, a separate levy under the transaction tax law, administered by the tax authority ZATCA and collected at registration through the official settlement flow. Legally that tax is the seller's liability, and in practice it is commonly priced into the deal. Confusing the two is the most common error in buyer budgets: VAT is a consumption tax on supplies, while the 5% is a transaction tax on the transfer itself.
Where VAT does appear: the brokerage commission
The verified VAT line in a purchase budget is the brokerage commission. A broker's commission is capped by law at 2.5% of the price, and VAT at 15% applies to the commission itself, payable only when a broker is actually engaged. Other services you buy along the way are also priced with VAT at category level, so read every invoice line by line and ask about each charge: what it is, and who levies it. The verified list of government charges at purchase stays short: the 5% transaction tax, and no other government fee is verified.
A worked example
Take a SAR 2 million apartment bought with a broker engaged at the legal cap. The commission is 2.5% of the price, so SAR 50,000. VAT at 15% applies to that commission, so SAR 7,500. The 5% transaction tax on the price is SAR 100,000, commonly priced into the deal. Buy the same apartment direct from the developer and the commission and its VAT line disappear together, because no broker was engaged. The tax on the transfer remains.
What is not VAT
None of the other cost lines is VAT. The 5% transaction tax at purchase is a separate levy. When a foreign owner sells, the 5% returns because the seller is now the transferor, and a 2% disposal fee for non-Saudi sellers applies in Riyadh, Jeddah, Makkah and Madinah under Article 9 of the Implementing Regulations, and 0% elsewhere. That fee is a government charge, not VAT. Inheritance and court-ordered transfers sit outside it at category level.
How to read a cost sheet
Ask two questions of every line: is it a tax, a fee, or a service price, and who levies it. The verified answer set is small: the 5% transaction tax on the price, a capped commission plus 15% VAT on that commission if a broker is engaged, and the 2% disposal fee in four cities when a foreign owner sells. A line that matches none of these needs an explanation before you pay it. Exact riyal fee amounts circulating on blogs are unverified.
The honest next step
Mulkiya is not the seller and not the broker, and it takes no commission, so no VAT line ever arises from using the platform. The honest first step is the eligibility check: seven questions about your status and your target property, answered by a deterministic rules engine against the law, cited to Royal Decree M/14 and Council of Ministers Decision 43. Know that you can buy before you price the taxes.
Is there VAT on the purchase price of a home in Saudi Arabia?
Not at category level. The price carries the 5% Real Estate Transaction Tax, legally the seller's liability and commonly priced into the deal. VAT at 15% applies to the brokerage commission, not to the property price.
How much VAT do I pay on a broker's commission?
15% of the commission, and only when a broker is engaged. The commission itself is capped at 2.5% of the price. On a SAR 2 million purchase at the cap, that is SAR 50,000 of commission and SAR 7,500 of VAT.
Do I pay VAT when buying direct from a developer?
There is no brokerage commission, so there is no VAT line on one. The 5% transaction tax still applies. Services you buy along the way may carry VAT at category level; question any line you do not recognize.
Is the 2% exit fee a form of VAT?
No. It is a government disposal fee charged to non-Saudi sellers in Riyadh, Jeddah, Makkah and Madinah, and 0% elsewhere. It is separate from VAT and from the 5% transaction tax that returns on sale.