Saudi Arabia will impose a new five percent tax on real estate transactions, according to a Royal Decree by King Salman bin Abdulaziz, state news agency SPA reported on Thursday.
“The decree exempts all real estate transactions which involve a transfer of ownership and sale from the 15 percent Value Added Tax and will replace it with a Real Estate Transaction Tax of five percent of the value of the property at the time of sale,” Minister of Finance Mohammed al-Jadaan said in a statement carried by the Ministry’s website.
He added that the decision aims to support Saudi citizens, enable them to own their homes and contribute to stimulating the economy by boosting the residential and commercial real estate sectors.
“The Royal Decree exempts real estate sale transactions (including transferring ownership and all types of sales whether residential, commercial, agricultural or developed and undeveloped lands) from the 15 percent VAT, while granting licensed real estate developers the right to recover the VAT incurred on their goods and services which were subject to VAT. This will be in accordance with the terms and conditions to be issued by the General Authority for Zakat and Tax (GAZT),” the Minister added in his statement.
The aforementioned real estate transactions will instead be subject to the new 5 percent Real Estate Transaction Tax.
The Royal Decree adds that the state will bear the cost of the Real Estate Transaction Tax for first time homeowners, given that its amount does not exceed 1 million riyals ($267,000) of the price of the property. This is available for all Saudi nationals.