Residential land purchases subject to 5% real estate tax, ZATCA clarifies
Saudi tax authority confirms 5% real estate transaction tax applies to residential land purchases; first home exemption covers only ready-to-move-in homes.
Key Takeaways
AIThe Zakat, Tax and Customs Authority has clarified the tax status of residential land purchases, confirming that the exemption for first homes does not apply to buying land or self-construction.
The clarification came in response to a query on the 'Ask Zakat, Tax and Customs' account on X, regarding whether buying residential land for the first time is subject to tax, regardless of the land's value.
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The authority confirmed that the sale and purchase of land is subject to a 5% real estate transaction tax based on the transaction value.
It added that the government covers the 5% real estate transaction tax for Saudi citizens purchasing their first ready-to-move-in home, up to one million riyals (SAR 1 million), according to approved regulations.
The authority stressed that this exemption does not apply to land purchases or self-construction, meaning buying land to build a home is not eligible for the first home tax benefit.