The Directorate General of Taxes (DGI) has issued clarifications regarding amendments introduced by the Finance Law for 2026 concerning the registration duty exemption system for real estate promotion. The DGI released Instruction No. 42 on May 19, 2026, detailing these changes, which came into effect on January 1, 2026. This full instruction aims to provide a clear understanding of the revised framework governing these exemptions. The Finance Law for 2026 specifically amended Article 258 bis 5 of the Registration Law through its Article 41, signaling a significant shift in policy.
The DGI stated that the exemption applies to "housing intended for primary use, and commercial and professional properties outside the scope of tax advantages." This clarification delineates the types of properties that may or may not benefit from the updated provisions. The DGI also stipulated that "registration services are required to verify the status of the purchaser and to remind that 'عدل' housing remains exempt from duties." This emphasizes the ongoing importance of due diligence and the continued protection for specific housing categories.
New Rules for Individual Buyers
Until December 31, 2025, a system was in place that granted an exemption from registration and consideration transfer duties for housing constructed under real estate promotion. This previous exemption system was conditional on several specific requirements. These conditions included that the property had to be designated for main residential use, built in accordance with existing real estate promotion legislation, and utilized only once per individual. This setup aimed to support individual homeownership for primary residences.
The Finance Law for 2026 has introduced a significant shift by explicitly excluding real estate developers from benefiting from this exemption. This change marks a departure from previous regulations and redefines the beneficiaries of the tax relief. The exemption is now exclusively available to individuals who purchase property for main housing within a real estate promotion operation, thereby focusing the benefit on end-users. Consequently, legal entities, including companies and institutions, are no longer eligible for this exemption, streamlining the application of the tax relief. Registration departments are now mandated to verify all legal conditions before granting the exemption. This rigorous verification process includes confirming the buyer's status as an individual, the intended use of the property as a main residence, and adherence to the provisions of Law No. 11-04 of February 17, 2011, which governs real estate promotion activities. This ensures that the exemption is applied strictly according to the new legal framework.
Expanded Scope and Specific Exemptions
The Finance Law for 2026 has expanded the scope of the registration duty exemption, broadening its reach to cover new categories of properties and financing methods. The exemption now includes housing built under real estate promotion and financed through Islamic finance mechanisms, specifically Murabaha and Ijara Muntahia Bitamlk. This change broadens the types of properties and financing methods that can qualify for the tax relief, reflecting an adaptation to diverse financial practices.
Housing provided by وكالة عدل (AADL) also continues to be exempt from registration duties. This exemption applies after the full installment payments have been made and ownership of the property has been transferred to the buyer, ensuring that AADL beneficiaries receive this continued support. Additionally, social housing developed by Real Estate Promotion and Management Offices (OPGI) is exempt from these duties when sold to the current occupants. This measure aims to facilitate homeownership for individuals residing in OPGI properties.
The new regulations further extend the exemption to include subsidized social housing and promotion housing initiatives designed to support middle-income families, acknowledging the need for broader housing affordability. Rural housing has also been incorporated into the exemption framework, aiming to provide tax relief for properties in these areas and encourage development outside urban centers. However, the amendments explicitly state that commercial and professional premises constructed under real estate promotion are not covered by these expanded exemptions, meaning they remain subject to standard registration duties. This distinction clarifies that the primary focus of the exemption remains on residential properties.
Resale Obligations and Developer Dues
Properties that received an exemption at the time of purchase will still be subject to the full 5 percent property transfer duties when subsequently resold. This ensures that while initial buyers benefit from the exemption, subsequent transactions incur standard duties, maintaining a balance in the tax system. This provision prevents repeated exemptions for the same property over its lifecycle. Separately, real estate developers, acting as sellers, retain the obligation to pay 2.5 percent of registration duties. This amount represents half of the standard 5 percent registration rate, clarifying the financial responsibilities of developers within the revised framework and ensuring their continued contribution to registration revenues.