Saudi Arabia lists 21 specific cases when real estate transaction tax can be exempted
Violators may face fines up to three times the tax due for providing false information
Dubai: Saudi Arabia has outlined 21 specific cases where real estate transactions can be exempt from the Real Estate Transaction Tax (RETT), as per new regulations detailed in the official gazette, Umm Al Qura.
The exemptions, announced shortly after the law’s approval by the Council of Ministers on September 17, 2024, aim to simplify tax procedures for individuals and entities involved in real estate transfers.
Among the key exemptions are transactions related to estate divisions, gifts to family members up to the third degree (like great-grandparents, great-grandchildren and first cousins), and property transfers to charitable associations.
Real estate transactions involving lease-to-own contracts and finance leases concluded before October 1, 2020, are also exempt, as are those subject to value-added tax before that date.
Additional exemptions cover corporate transactions, such as mergers and acquisitions, as well as transfers between entities under unified ownership or related to endowment arrangements. Transactions involving forced sales and transfers to licensed developers for off-plan sales also qualify for relief.
The law grants a one-year grace period for individuals to document pre-2020 transactions and requires that all qualifying transactions be registered on the real estate transaction portal of the Zakat, Tax, and Customs Authority.
Violators may face fines up to three times the tax due for providing false information or evading the tax.
With these exemptions, Saudi Arabia seeks to streamline real estate processes, reduce tax burdens, and foster compliance, supporting both individuals and businesses as they navigate the evolving landscape of real estate transactions.