Residential land purchases subject to 5% real estate tax, ZATCA clarifies

Saudi tax authority ZATCA has confirmed that a 5% real estate transaction tax applies to residential land purchases. The exemption for first-time home buyers only covers ready-to-move-in homes, not land or self-construction properties. This clarification was issued in response to inquiries on X, asking if buying residential land for the first time incurs tax regardless of its value.

According to ZATCA, the 5% tax is levied on the sale and purchase of land based on the transaction value. Additionally, the government waives this 5% tax for Saudi citizens purchasing their first ready-to-move-in home, with a limit of one million riyals (SAR 1 million), per approved regulations. However, this first home tax benefit does not extend to land purchases or self-construction projects, meaning individuals buying land to construct their own homes will still be subject to the 5% real estate transaction tax.