If you have real estate and you want to dispose of it, whether by sale, gift, will, or rent, do you know if this disposal is subject to real estate tax or not?
In this article, we will explain to you what is meant by real estate disposal, what is the real estate tax, and what actions are not subject to real estate tax.
Real estate disposal means any legal transfer of ownership of real estate or possession for the purpose of owning it or owning its benefit, such as selling, netting, gift, will, barter, lease, financial lease, transfer of stakes in real estate companies, or a usufruct right for a period of more than fifty years.
The real estate disposal tax is (5%) of the total value of real estate disposal, regardless of its condition, shape, or use at the time of disposal, and it includes land and what is being constructed, constructed, or built on it, and whether the disposal is focused on it in its condition or after establishing facilities on it, and whether this disposal is Including the entire real estate or any part of it separated or communal or housing unit or other types of real estate, and whether the disposal is documented or not.
However, there are cases that are excluded from the application of the real estate transaction tax, which is as follows:
1- Disposing of the real estate in cases of division or distribution of the estate.
2- Disposing of the property for free in order to endow the offspring of “Ahli”, or a charitable organization, or a licensed charitable association, when establishing the endowment at the outset, and this does not include actions that take place for management purposes.
3- Disposal of real estate for a governmental entity, public legal persons, or public benefit entities and projects. For the purposes of this paragraph, the public interest is intended for entities and institutions that hold this capacity under the Civil Associations and Institutions Law.
4- Disposing of real estate by a government agency in its capacity as a public authority outside the framework of economic, investment, or commercial activity.
5- Forced disposal of real estate in cases of expropriation for the public interest or temporary seizure of real estate.
6- Disposing of real estate as a gift documented by the competent authority for the husband or wife or a relative up to the second degree (grandfather, grandmother, brother, sister, grandson, and granddaughter), or according to a legally documented legal will, not exceeding a quarter of the estate of the testator.
7- Temporarily disposing of the real estate for the purpose of using it as a security for financing or credit unless execution is carried out on the real estate subject of the guarantee or credit by transferring it permanently to the financier or to a third party.
8- Disposing of real estate before the effective date of the implementing regulations for the real estate disposal tax as of 14/2/1442 AH corresponding to 10/4/2020 AD, in implementation of lease-to-own contracts and financial lease contracts.
9- Temporarily disposing of real estate for the purpose of transferring it between a fund and a custodian or vice versa, or among custodians for the same fund in accordance with the provisions of the Capital Market Law and the regulations and instructions issued accordingly.
10- Disposing of real estate by presenting it as a share in kind by any person in the capital of joint-stock companies, limited liability companies, general partnership companies, or simple partnership companies, provided that the shares or shares corresponding to the real estate in question are not disposed of for a period of five years from the date of registration or ownership Shares or shares corresponding to the real estate, and that these companies keep financial statements audited by a certified external auditor throughout this period.
11- Disposing of business in an international body, international organization, international organization or diplomatic organization, or a member of the diplomatic, consular, or military corps accredited in the Kingdom, on the condition of reciprocity.
12- Bulletin of the submitted text subject to the value of the title.
13- Disposing of real estate, in the name of the company, provided that it is installed in the company’s assets before the date of the regulation’s entry into force, the scene of the real estate company, corresponding to 10/4/2020 exporting the inclusion of assets within the company’s assets before the date of the regulation until the date of disposal.
14- Investing in real estate that establishes real estate properties, when establishing a startup fund.
15- Other cases issued by a decision of the Minister of Finance.
If you are looking for a lawyer specializing in real estate tax issues in Riyadh, you can count on us in the Saudi Lawyers Group, we have an integrated team of Saudi lawyers in the Kingdom of Saudi Arabia, providing all legal services related to real estate tax issues, including providing legal advice related to all cases Finance Financial and global companies
To request legal advice, we recommend Al Othman Lawyers and Consultants office for its specialization in this field.
And for free legal advice, do not hesitate to contact us at: 535008888
