Saudi Press

Saudi Arabia and the world
Thursday, Jul 10, 2025

Saudi scraps 15% VAT levy for home buyers

Government will also shoulder the cost of taxes for first-time home buyers of properties worth up to 1 million riyals
Saudi Arabia has added new incentives to keep its mortgage boom going by scrapping a 15 percent value-added tax on property sales and offering other relief for home buyers amid a push by the Arab world’s largest economy to expand residential ownership.

Property transactions will instead be subject to a new five percent real estate sales tax, according to state-run news agency SPA. The government will also shoulder the cost of taxes for first-time home buyers of properties worth up to 1 million riyals ($267,000), according to a royal order published on Friday.

The threshold for the tax exemption was increased from 850,000 riyals previously for citizens buying their first homes.
Saudi Arabia’s mortgage market has emerged as a bright spot at a time the economy is reeling from the global pandemic and lower oil prices, with citizen unemployment hitting its highest level on record in the second quarter. But the kingdom has still had to resort to austerity measures to stabilize public finances, including a tripling of VAT - which was introduced for the first time in 2018 - to 15 percent in July.

“They’ve essentially revoked the tax increase on property purchases and that’s going to help maintain the momentum in the mortgage market,” CI Capital senior analyst Sara Boutros said by phone. “The bulk of the home-demand by Saudi middle-class buyers is within the 1 million-riyals range, which means those purchases will be tax-free.”

The world’s biggest oil exporter has taken a number of steps to boost home construction and lending. Home ownership among citizens reached 62 percent in March, according to the country’s housing minister, and the kingdom is now targeting a rate of 70 percent by 2030, as part of Crown Prince Mohammed bin Salman’s economic transformation plan.

The increase in mortgages has kept credit to the private sector growing at the fastest pace in years, as home lending surges from a low base. New residential mortgages provided by banks have accounted for the bulk of credit expansion in recent months.
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