The true cost of buying property in Saudi Arabia
Saudi Arabia’s property market is experiencing a surge of interest, driven by Vision 2030 development and the landmark decision to open ownership to foreign investors in January 2026. With no personal income tax and no capital gains tax, the tax environment is exceptionally favourable — but transaction costs still need careful accounting.
The headline cost is the Real Estate Transaction Tax (RETT) at 5% of the property value, paid at notarization. When you add legal fees, registration, and agent commission, total upfront costs run 8–10% of the purchase price. Understanding these costs upfront is essential for accurate yield and return calculations.
Real Estate Transaction Tax (RETT)
Saudi Arabia’s RETT is a flat 5% of the property value, paid at the time of notarization via ZATCA (the Zakat, Tax and Customs Authority). It replaced the previous 15% VAT on residential property sales in April 2025.
On a SAR 1,000,000 property, that’s SAR 50,000. On a SAR 2,000,000 property, SAR 100,000. The rate is the same for all buyer types — Saudi nationals, GCC nationals, and foreign investors.
One notable exemption: Saudi nationals purchasing their first home receive a government-funded RETT exemption on the first SAR 1,000,000 of the purchase price. This doesn’t apply to foreign buyers or investment properties.
Residential property sales are exempt from VAT (RETT applies instead), but commercial property sales and leases are subject to 15% VAT in addition to the 5% RETT — a combined 20% on commercial transactions.
Closing costs
Saudi Arabia’s closing process is relatively streamlined, largely digitised through the Najiz platform:
- RETT (5% of purchase price) — the main transaction tax, paid to ZATCA at notarization.
- Title Deed Registration — administrative fee for transferring the deed. Varies by property value.
- Notary / Attestation Fee — for notarizing the sale contract. Relatively modest compared to European notary fees.
- Legal Fees (~0.75% of purchase price) — optional but strongly recommended for foreign buyers. Covers contract review, due diligence, and title verification.
- Municipal Administrative Fees — municipal processing fees that vary by city.
If you have a mortgage, add:
- Mortgage Registration Fee — for registering the mortgage lien against the title.
- Bank Valuation Fee — independent valuation required by the lender before loan approval.
Agent commission (seller pays):
Agent commission in Saudi Arabia is capped at 2.5% of the property value by regulation, typically paid by the seller. 15% VAT applies on the commission, making the effective cost approximately 2.875%.
Total upfront costs for a buyer — including RETT, legal fees, and registration — typically run 6–8% of the purchase price for a cash purchase, or 7–9% with mortgage-related fees.
Ongoing costs
Saudi Arabia has one of the leanest ongoing cost structures of any major property market:
- No annual property tax — Saudi Arabia does not impose a broad annual property tax on developed properties. This is a significant advantage over markets like the US (1–2% annually), the UK (Council Tax), or Australia (Council Rates).
- Property Insurance (~SAR 3,000/year) — covers the property against structural damage. Rates are typically 0.1–0.3% of insured value.
- Maintenance Reserve (~SAR 15,000/year) — budget for interior repairs and upkeep. Typically 1–2% of property value per year.
For apartments, add:
- Service Charge — annual charge covering building maintenance, common areas, security, pool/gym, and management. Varies significantly by building quality and location — SAR 5,000–20,000/year for mid-market apartments.
For villas in gated compounds, add:
- Compound/Community Fee — covers security, landscaping, and shared amenities. Typically SAR 8,000–20,000/year depending on the compound.
The absence of annual property tax is a major differentiator. In markets like the US, property tax alone can consume 1–2% of property value every year, significantly eroding net yields. In Saudi Arabia, your ongoing costs are limited to insurance, maintenance, and (for apartments/compounds) service charges.
Capital gains tax
Like the UAE, Saudi Arabia has no personal income tax or capital gains tax on property. When you sell, your capital gain is entirely untaxed — the 5% RETT on the sale transaction is the only exit tax for individuals.
This applies equally to Saudi nationals and foreign investors. There’s no holding period requirement, no primary residence distinction (since there’s no tax anyway), and no complex bracket calculations.
For corporate investors, the picture differs:
- Foreign-owned companies pay 20% corporate income tax on capital gains.
- Saudi/GCC-owned entities pay 2.5% Zakat on net worth (not directly on capital gains).
When selling, the main exit costs are RETT (5% of sale price), agent commission (up to 2.5%), and a mortgage discharge fee if applicable. There are no compliance certificates or pre-sale inspections required.
Foreign buyers
Saudi Arabia opened property ownership to foreigners in January 2026 under a new law that eliminated previous barriers:
- No minimum investment threshold — the old SAR 30 million requirement has been removed.
- No prior licensing requirement — the previous approval process has been simplified.
- Designated zones — foreign ownership is permitted in specially designated zones in Riyadh, Jeddah, and other major centres.
- Makkah & Madinah — restricted to Muslim individuals and specific Saudi entities.
- Same RETT rate — foreign buyers pay the same 5% as Saudi nationals, with no surcharges.
One important restriction: short-term rental (Airbnb) hosting permits are currently restricted to Saudi nationals only. Foreign investors should plan for long-term rental income rather than STR strategies.
What does this mean in practice?
Saudi Arabia offers one of the most tax-efficient property investment environments globally. With no income tax, no capital gains tax, and no annual property tax, the total tax burden across the full investment lifecycle is limited to the 5% RETT on purchase and 5% RETT on sale — a combined 10% across the entire hold period.
Compare this to a market like the UK, where you might pay 5–10% stamp duty on purchase, Council Tax annually, and 18–28% CGT on sale. Or Australia with up to 5.5% stamp duty, Council Rates annually, and up to 22.5% effective CGT.
The key considerations for investors are:
- Service charges — these vary dramatically and can significantly impact net yields, especially for apartments in premium developments.
- Evolving regulations — the foreign ownership law is new (2026), and designated zone lists may expand over time.
- STR restrictions — if you’re a foreign investor, plan for long-term rental, not Airbnb.
- Currency stability — the SAR is pegged to the USD at 3.75, eliminating currency risk for USD-denominated investors.
Average gross rental yields in Saudi Arabia are approximately 6.8% nationally, with Riyadh and Jeddah offering the strongest demand fundamentals driven by Vision 2030 population and economic growth.
Calculate your exact costs
Our free Saudi Arabia property calculator handles all of these costs automatically. Enter your purchase price, financing details, and rental income to see your full cost breakdown, rental yields, and 10-year projection.
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For a detailed guide to each cost category, read the Saudi Arabia buying guide.