GAZT explains real estate transaction tax, says effective as of Oct. 4

The General Authority of Zakat and Tax (GAZT) said sale of real estate supplies will be exempt from a 15% value-added tax (VAT), but subject to a 5% property deal tax starting Sunday, Oct. 4.

Real estate transactions are any legal transaction that transfers the ownership or possession of a property, such as sale, settlement, testament, finance lease, and transfer of stakes in property companies.

In addition, the Kingdom will beara real estate transaction tax of SAR 1 million instead of SAR 850,000 previously from the first-home purchase price.

The exemption decision covers all real estate supplies, including sale, ownership transfer, the right of disposal – such as, rent-to-own, finance lease, and Murabaha finance, GAZT explained.

On the other hand, the new property deal tax has some exceptions, such as the distribution and transfer of assets among heirs, free-of-charge settlement of assets to the husband, wife or second-degree relatives.

Residential rents are still exempt from VAT, while commercial properties are subject to a 15% VAT.