1Issue 3.0 | May 2026

An Outline of Real Estate Tax Amendments • Value Added Tax (VAT) was first implemented in the Kingdom on 1st January 2018G at a standard rate of 5% on all supplies and import transactions, including all real estate sales made as part of an economic (business) activity. Limited exceptions, such as the rental of residential property, were exempted from VAT. • On 1st July 2020, the VAT Standard Rate was raised to 15% on taxable supplies. • Starting from 4 October 2020, the application of taxes on built property and land sales in the Kingdom was amended pursuant to Royal Order No. (A/84) issued on 1st October 2020, whereby the supply of real estate by way of sale became exempt from VAT. Instead, real estate disposals have become subject to Real Estate Transaction Tax (RETT) at a rate of 5%. This tax is collected by the Authority in accordance with the RETT Law and its Implementing Regulations. 1.2 This Guideline • This Guideline is designed for businesses and individuals within the real estate sector, including any person who purchases, sells, or rents residential, commercial, or any other type of real estate. • This Guideline provides information on the tax treatment of these activities and explains the transitional tax provisions applicable to cases occurring during the real estate VAT exemption period. ZATCA has issued separate detailed guidelines on RETT implementation. To access such guidelines and other reference materials, please visit the Authority’s website zatca.gov. sa. 2.Definitions Real Estate: Refers to any land or built property. It is defined in the VAT Implementing Regulations as including (1): a. Any specific plot of land over which ownership or possession rights, or other real rights may be claimed; b. Any buildings or engineering structures permanently erected on land; c. Any fixtures or equipment forming a fixed part of, or permanently attached to, a building, structure, or construction. Residential Real Estate: Refers to property intended for use as a place of residence (2). For VAT purposes, it is defined as: “A permanent dwelling designed for human occupation, including immovable property used or intended to be used as a home, such as houses, apartments, residential units, and other real estate intended to be a person’s primary residence, including residential accommodation for students and school pupils.” Residential Real Estate includes areas legally appurtenant to the property or real estate, including gardens, private parking spaces, areas, or any other attachments that constitute a permanent part of the property. Non-Residential Real Estate: Any Real Estate that does not meet the requirements of the definition of Residential Real Estate. This includes, for example: a. Commercial real estate. b. Vacant/bare land, whether developed or undeveloped. c. Partially completed construction works.