Saudi’s new tax relief unleashed for home buyers to keep boom rolling

Bloomberg

Saudi Arabia added new incentives to keep its mortgage boom going by scrapping a 15% value-added tax on property sales and offering other relief for home
buyers amid a push by the Arab world’s largest economy to
expand residential ownership.
Property transactions will instead be subject to a new 5% real estate sales tax, according to state-run news agency SPA. The government will also shoulder cost of taxes for first-time home buyers of properties worth up to $267,000, according to a royal order.
The threshold for tax exemption was increased from 850,000 riyals previously for citizens buying their first homes.
Saudi Arabia’s mortgage market has emerged as a bright spot at a time the economy is reeling from global pandemic and lower oil prices, with citizen unemployment hitting its highest level on record in the second quarter. But the kingdom has still had to resort to austerity measures to stabilise public finances, including a tripling of VAT — which was introduced for the first time in 2018 — to 15% in July.
“They’ve essentially revoked the tax increase on property purchases and that’s going to help maintain the momentum in the mortgage market,” CI Capital senior analyst Sara Boutros said by phone.
The world’s biggest oil exporter has taken a number of steps to boost home construction and lending. Home ownership among citizens reached 62% in March, according to the country’s housing minister, and the kingdom is now targeting a rate of 70% by 2030, as part of Crown Prince Mohammed bin Salman’s economic transformation plan.
The increase in mortgages has kept credit to the private sector growing at the fastest pace in years, as home lending surges from a low base. New residential mortgages provided by banks have accounted for the bulk of credit expansion in recent months.