Can You Recover Real Estate Transaction Tax (RETT)?
Saudi Arabia’s Real Estate Transaction Tax law imposes a 5% tax on nearly all property transactions — regardless of the property’s type, condition, or usage, whether the entire property or a portion, developed or under construction, even if the transaction isn’t officially documented.
But what many don’t realize is that the law does allow refunds in specific situations — and understanding these exceptions could save you significant money.
In this article, Al-Salamah Law Firm outlines the key scenarios where you’re entitled to a refund — and how to properly request it.
When Can You Request a RETT Refund?
1. Cancelled or Voided Property Transactions
This is the most common case. If the tax was paid but the sale was later canceled before the ownership transfer was finalized, a full refund can be claimed — provided specific conditions are met:
- The original owner refunds the full sale price to the buyer.
- The buyer returns the property to the original owner and formally cancels the transaction via a notary or certified documentation within 90 days of the initial sale registration.
- The cancellation is reported to ZATCA within 30 days, along with clear proof that the transaction was fully voided.
2. Payment Made by Mistake
Sometimes, tax is paid unnecessarily. Examples include:
- Duplicate payments: Paying the tax twice for the same transaction.
- Tax paid on exempt deals: Such as gifts to immediate family (spouses, children, parents, grandparents), in-kind contributions to a company under exemption conditions, or transfers due to inheritance.
- Overpayment: Due to a miscalculation of the property’s value.
3. Retroactive Exemption Eligibility
In some cases, someone pays the tax and later qualifies for an exemption. The most common example is the first home exemption for Saudi citizens.
Example:
A Saudi citizen purchases their first home but didn’t obtain the exemption certificate from the Ministry of Municipal and Rural Affairs and Housing before finalizing the deal. They paid the 5% tax to complete the registration. If they later obtain the certificate retroactively, they can apply for a refund — up to the exempted amount (max property value: SAR 1 million = SAR 50,000 refund).
4. Court Ruling or Official Decision
If a final court judgment or official decision voids or cancels the sales contract, that judgment serves as strong legal grounds to request a refund of the RETT from ZATCA.
Who Can Request a Refund?
The person who paid the tax — typically the seller (disposer) — is the one legally authorized to submit the refund request to the Zakat, Tax and Customs Authority (ZATCA).
How to Submit a RETT Refund Request
The refund application is submitted online via the ZATCA portal, and the general steps are:
- Log in to your account on the ZATCA platform.
- Select the RETT service.
- Choose the “Refund Request” option.
- Enter the payment invoice number related to the transaction.
- Attach supporting documents, which may include:
- Proof of cancellation (e.g., notarized cancellation agreement).
- A copy of the original title deed.
- Tax payment receipt.
- Court ruling (if applicable).
- First home exemption certificate (if applicable).
- Seller’s IBAN number for the refund transfer.
- Submit the request: After ZATCA reviews the request and attachments, they’ll notify the applicant of their decision (approval or rejection). If approved, the refund is processed to the seller’s bank account.
The right to request a refund of RETT is guaranteed by law, but subject to strict eligibility criteria and documentation requirements.
If you believe your case qualifies or you need help navigating the refund process, our expert legal team at Al-Salamah Law Firm is here to support you. With deep experience in tax, real estate, and corporate law, we understand how to align and apply overlapping regulations correctly — and help you reclaim what’s rightfully yours.
Let us guide you every step of the way. Our professional team is well-versed in corporate, tax, and real estate matters — and more.
Read more : Corporate Real Estate: When Is It Exempt from Real Estate Transaction Tax?
