Guide to Property Taxes in Saudi Arabia

Under Saudi Arabia's new foreign real-estate ownership framework, effective from January 2026, non-Saudi individuals and entities can acquire real estate in Saudi Arabia subject to the locations, conditions and restrictions established under the new regime. 

Special restrictions continue to apply, particularly in Makkah and Madinah, and the permitted scope of foreign ownership can depend on the investor, location and type of property.

Rental Income Tax

Saudi Arabia does not impose a conventional personal income tax on individuals.

However, this does not necessarily mean that all rental income earned by a foreign investor is tax-free. Where a non-Saudi individual carries on a taxable activity in Saudi Arabia, income attributable to that activity can fall within the Saudi income-tax regime.

Taxable business income attributable to a non-Saudi taxpayer is generally subject to 20% income tax on net adjusted taxable profits. Accordingly, where real-estate rental activity constitutes a taxable business activity or is carried on through a taxable Saudi entity or permanent establishment, the resulting net rental profit can generally be subject to the 20% income-tax regime.

For a nonresident foreign individual directly owning and renting a Saudi residential apartment on a long-term basis, annual gross rental income of $18,000, $72,000 and $144,000 is assumed to incur deductible expenses equal to 30% of gross rent.

This produces estimated net taxable rental income of $12,600, $50,400 and $100,800, respectively. Applying the standard 20% income-tax rate results in estimated annual income tax of $2,520, $10,080 and $20,160.

Under this standardized calculation, the effective income-tax burden is therefore approximately 14% of gross rental income at each income level.

Capital Gains

Capital gains arising from the disposal of assets used in a taxable Saudi business are generally included in taxable income and subject to the ordinary 20% income-tax rate applicable to the taxpayer.

The precise treatment depends on the investor's structure, the nature of the property and whether the disposal falls within the Saudi income-tax regime.

Corporate Tax

Companies and other taxable entities attributable to non-Saudi and non-GCC ownership are generally subject to Saudi income tax at 20% of net adjusted taxable profits.

Accordingly, where a foreign investor holds Saudi rental property through a taxable company, rental profits are generally included in the company's taxable income, with qualifying expenses taken into account in determining net taxable profit.

Saudi/GCC ownership can instead fall within the Zakat system, while companies with mixed Saudi/GCC and foreign ownership can be subject to both Zakat and income tax in proportion to the relevant ownership interests.

Property Buying Costs and Taxes in Saudi Arabia

Property Holding Tax

Saudi Arabia does not generally impose an annual property holding tax on ordinary completed residential real estate based on the property's value. Therefore, a nonresident investor holding a completed apartment for long-term rental would generally have no recurring annual property tax.