A Saudi citizen buys their first home through the government's Sakani housing program, at a purchase price of SAR 900,000. Under the Real Estate Transaction Tax (RETT) exemption for first-home purchases by Saudi citizens, what is the general RETT outcome for this specific purchase?
- The buyer must still pay the full 5% RETT on the entire SAR 900,000 purchase price, since the exemption applies only to VAT, not to RETT
- The state bears the RETT on the purchase price up to a cap of SAR 1,000,000, so on a SAR 900,000 first home the buyer generally pays no RETT at all, provided a Sakani exemption or subsidy certificate is obtained
- The buyer pays RETT only on the amount by which the price exceeds SAR 500,000, meaning RETT applies here only to SAR 400,000 of the price
- The exemption applies automatically to any Saudi citizen's real estate purchase regardless of whether it is a first home, so no certificate or eligibility check is required
Why B? And why not the others?
Correct answer: B. The state bears the RETT on the purchase price up to a cap of SAR 1,000,000, so on a SAR 900,000 first home the buyer generally pays no RETT at all, provided a Sakani exemption or subsidy certificate is obtained
The first-home program has the state bear the RETT due on a citizen's first home purchase up to a value cap of SAR 1,000,000, so for a SAR 900,000 purchase, which falls entirely within that cap, the buyer generally pays no RETT at all, provided eligibility is confirmed and an exemption or subsidy certificate tied to the Sakani program is obtained; amounts above the cap would remain taxable on the excess. The option requiring full RETT payment because the exemption supposedly applies only to VAT is wrong because this exemption program is specifically an RETT relief, introduced precisely because ordinary property sales are exempt from VAT and instead fall under RETT, and it is that RETT liability the state is bearing here. The option describing a SAR 500,000 threshold is wrong because no such figure defines this program; the relevant cap for the first-home exemption is SAR 1,000,000, not SAR 500,000. The option treating the exemption as automatic for any citizen's purchase regardless of first-home status is wrong because the relief is specifically conditioned on the purchase being the citizen's first home and on obtaining the relevant Sakani-issued certificate, not granted indiscriminately on every property purchase by a citizen.
Source: Royal Decree No. (A/84); ZATCA Real Estate Transaction Tax guideline on the first-home exemption; Sakani program