Article 17 of the Saudi Expropriation of Real Estate for Public Interest Law
المادة 17 من نظام نزع ملكية العقارات للمصلحة العامة · الباب الرابع: التعويض والإخلاء
A person whose property is expropriated is exempt from the real estate transaction tax on buying a replacement property up to the compensation amount within 5 years, and from white land fees if compensated with replacement land.
Official text (Arabic)
This article has not been amended since the law was issued.
1- يُعفى من تنزع ملكية عقاره من ضريبة التصرفات العقارية المترتبة على شراء عقار بديل من العقار المنزوعة ملكيته، على أن يكون الإعفاء في حدود مبلغ الضريبة المفروض على عملية الشراء فيما لو كان بكامل مبلغ التعويض أو أقل، وأن يكون الإعفاء في حال تمت عملية شراء العقار البديل خلال مدة لا تتجاوز (خمس) سنوات من تاريخ استلام مبلغ التعويض.
2- يُعفى من تنزع ملكية عقاره من رسوم الأراضي البيضاء إذا كان التعويض بالنسبة له عبارة عن أرضٍ بديلة، على أن يكون الإعفاء لمدة يتفق وزير المالية رئيس المجلس ووزير البلديات والإسكان على تحديدها.
This is the official Arabic wording, the only legally binding version. We do not translate the law itself; the explanation below is ours. Official source: Bureau of Experts at the Council of Ministers
Article 17 explained in plain English
This Article provides two exemptions for a person whose property is expropriated:
First: Exemption from the real estate transaction tax on buying a replacement property, with two conditions:
- Limit of the exemption: up to the amount of tax that would be imposed on a purchase equal to the full compensation amount or less. If he buys for more than the compensation, the exemption does not exceed the tax corresponding to the compensation amount.
- Period: the purchase must take place within a period not exceeding 5 years from the date of receiving the compensation amount.
Second: Exemption from white land fees if his compensation is a replacement land. The Article does not specify the duration of this exemption, but leaves it to be determined by agreement between the Minister of Finance, Chairman of the Board, and the Minister of Municipalities and Housing.
The aim of the two exemptions is that the owner does not bear additional burdens because of his expropriation when he seeks to replace what he lost. This Article comes after Article 16, which allows compensation in kind by a replacement property with the owner's consent.
To learn how the exemption applies to a particular case, one may consult a lawyer specializing in real estate cases.
Practical example
Mohammed received compensation of SAR 800,000 for the expropriation of his house in Jeddah, and two years later bought a house for SAR 1 million. Mohammed is exempt from the real estate transaction tax up to the tax corresponding to SAR 800,000 and pays the tax on the difference, because the purchase took place within 5 years of receiving the compensation.
Translated from our Arabic explanation with machine assistance. For guidance only; it does not replace advice from a lawyer on your situation.
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Frequently asked questions about Article 17 of the Saudi Expropriation of Real Estate for Public Interest Law
Do I pay the real estate transaction tax if I buy a house with the compensation amount?
You are exempt from it up to the amount of tax on a purchase equal to the full compensation amount or less, provided the purchase takes place within 5 years of receiving the compensation.
What is the duration of the white land fee exemption for replacement land?
It is determined by agreement between the Minister of Finance, Chairman of the Board, and the Minister of Municipalities and Housing; the Article does not specify it.
Does the tax exemption cover the amount above the compensation?
No. The exemption is up to the tax corresponding to the compensation amount or less.
The texts are reproduced from the official website of the Bureau of Experts at the Council of Ministers for reference; where they differ, the officially published Arabic text prevails. This content is not legal advice.