The costs of selling a property in Saudi Arabia, and what you actually receive

Overview: what comes off the sale price?

The main costs a seller may bear:

• Real estate transaction tax, under the rules and as agreed in the contract.
• Broker commission, under the brokerage agreement.
• Repaying any mortgage and related fees.
• Fees for updating papers or the deed, if needed.
• Amounts due on the property: land fees, service charges or owners’ association dues.
• Preparation and repairs before selling.
• Valuation or advisory fees, if you commission them.

Not every cost applies to every deal, but reviewing them all avoids surprises.

Real estate transaction tax

Saudi Arabia levies a tax on real estate transactions such as sales, under the rules, usually calculated on the transaction value. It is paid before transfer, and ownership does not move without payment or proof of exemption. We do not state the rate here because it is set by regulation and may change.

In many cases the seller is legally liable, but the parties may agree in the contract who actually bears it. So agree this in writing before negotiating the final price — two offers at the same price differ in net proceeds if different parties bear the tax.

The rules provide specific exemptions or exceptions, such as some transactions between relatives or certain first-home purchases by citizens. Check whether any apply to your deal through the official channels of the Zakat, Tax and Customs Authority.

Broker commission

Commission is the broker’s fee for finding the buyer and completing the deal. It is agreed in the brokerage agreement within what the rules allow and may have a legal cap. Who pays depends on the agreement: the seller, the buyer or both.

It is usually due at completion. Ask whether it includes VAT, since brokerage services may be subject to it depending on the broker’s status. Read broker commission explained.

Mortgage release

If your property is mortgaged to a bank or finance company, the outstanding amount must be repaid or its transfer arranged before or at transfer. Some lenders charge early repayment fees under the contract and the rules.

Ask the bank for a letter stating the amount outstanding to an expected transfer date, any fees and the procedure. If the buyer is financing, the two banks may arrange repayment and transfer together.

Paperwork and procedures

The transfer itself is done through approved electronic channels and may not carry large fees. But some cases need steps first: updating an old deed, subdividing a unit, confirming heirs or a power of attorney. Some of these may carry fees or need professional help.

If the property has unpermitted extensions, regularising them may carry costs. Read documents needed to sell a property.

Amounts due on the property

Make sure nothing is owed on the property that could block transfer or that the buyer will ask to deduct: fees on undeveloped land in cities where they apply, service charges and owners’ association dues for apartments, or overdue utility bills.

Paying or knowing these in advance makes your figures accurate, reassures the buyer and avoids a last-minute delay at transfer.

Preparation and repairs

Preparation costs are optional but common: fixing leaks, servicing air conditioning, painting, a thorough clean, and photography if not included in the commission. You pay these before selling, so count them in what you spend.

The rule: spend on what removes a clear reason to hesitate, not on a big refurbishment that may not pay back. Read preparing a property for sale.

Valuation and advice

If you commission a certified valuation, the valuer charges a fee you agree with them. If the deal is large or complex, or the property is inherited, you may need paid legal advice. These costs are optional but can protect you from a bigger loss.

The valuation required by the buyer’s bank is usually paid by the buyer, depending on the bank.

If you sell as a company or investor

If a company owns the property, or the sale is part of a business activity, other tax or zakat considerations may apply to the gain or income depending on the seller’s status. We do not cover them here — consult a tax adviser before selling.

Who bears what?

The split depends on the rules and the agreement, but this is what to ask about each item:

Tax

Who is legally liable, and who actually bears it under the contract?

Commission

Seller, buyer or both? Does the other party know?

Mortgage release

Usually the seller, as it is their obligation to the bank.

Bank valuation

Usually the buyer, if financing.

Amounts due on the property

Usually the seller up to transfer date, unless agreed otherwise.

How to work out what you receive

Start with the expected sale price, then subtract what the seller bears in your deal: tax if it is on you, commission if it is on you, the mortgage balance and fees, any amounts due on the property, and what you spent on preparation. The result is what you actually receive.

Ask the broker to show this calculation with every serious offer, and compare offers by net proceeds, not price alone. A slightly lower offer where the buyer bears the tax or commission may be better for you than a higher one.

Checklist before accepting any offer

• I have checked the current tax rate and who bears it in the contract.
• Commission and who pays it are written in the brokerage agreement.
• I have a bank letter with the mortgage balance, if any.
• Nothing is owed on the property that would block transfer.
• I have calculated net proceeds for every serious offer.