GAZT explains difference between VAT and real estate transaction tax

Difference between VAT, real estate transaction tax

Case

Previously

Currently

VAT

VAT

Real Estate Transaction Tax

Sale of residential real estate

15 %

Exempt

5 %

Sale of commercial real estate

15 %

Exempt

5 %

Sale of land plot (residential, commercial, agricultural)

15 %

Exempt

5 %

Lease of residential real estate

Exempted

Exempt

N/A

Lease of commercial real estate

15 %

15 %

N/A

First home for citizens (villa, apartment, residential unit)

The state shall bear the due tax at not more than SAR 850,000 of the real estate value

Exempt

The state shall bear the due tax at not more than SAR 1 million of the real estate value

Sale of real estate to a government entity

15 %

Exempt

Not subject to tax

Sale of real estate by a government entity in its capacity as a public authority

Not subject to tax

Exempt

Not subject to tax

Sale of real estate by a government entity for commercial or investment purposes

15 %

Exempt

5 %

Sale of real estate to a diplomatic entity or an approved international organization

15 %

Exempt

Not subject to tax

Donation of real estate to spouse or relatives (up to second degree)

Not subject to tax

Exempt

Not subject to tax

Donation of real estate to any other party

15 %

Exempt

5 %

Expropriation of real estate for public benefit

15 %

Exempt

Not subject to tax

Provision of real estate as an in-kind share in the capital of joint stock companies, while retaining shares for a period of 5 years

15 %

Exempt

Not subject to tax

Usufruct right for real estate for a period of more than 50 years

15 %

15% (with redemption right for the registerer)

5 %

Inputs for building real estate, such as building materials and other

15 %

15 %

N/A

Redemption of input tax for sale of real estate

Input tax shall be deducted in returns

Input tax shall not be deducted in returns

Not refundable