Purchase Tax
In every real estate transaction the issue of purchase tax must be dealt with.
In certain cases one may be exempt from purchase tax, but the relevant documentation must still be filed with the tax authorities. This tax must be paid by the purchasers within 50 days of the signing of the contract and late payment can incur fines.
Purchase Tax Levels for the Period
Between 21/2/2011 and 15/1/2012
Single Residential Apartment or House
This is for the purchase of a residential apartment or house when the property purchased is the purchaser’s only apartment in Israel. This includes a situation where a new apartment or house is purchased instead of the existing
one. Even though the existing property has not been sold yet the tax authorities give the purchaser 24 months to sell his or her existing apartment.
| For the portion of the price until 1,350,000 NIS | 0% |
| For the portion of the price from 1,350,000 NIS until 1,601,210 NIS |
3.5% |
| For the remaining portion of the price above 1,601,210 NIS |
5% |
Additional Residential Apartment
This is when the purchaser purchases another apartment or house without selling his or her existing one within 24 months of the purchase on the new property.
| For the portion of the price until 1,000,000 NIS | 5% |
| For the portion of the price between 1,000,000 and 3,000,000 NIS |
6% |
| For the remaining portion of the price above 3,000,000 NIS | 7% |
New Olim
This is for new olim within the first 7 years after making aliya. This partial exemption is only given once.
| For the portion of the price until 1,463,035 NIS | 0.5% |
| For the remaining portion of the price above 1,463,035 NIS |
5% |
See example below
Notes
- A purchaser buying an apartment before he or she has sold the previous apartment must sell the previous apartment within 24 months of the date on which he or she purchased the new apartment. Should this not happen the purchase tax will be the higher tax for people purchasing an additional apartment.
- Purchase tax for foreign residents is the same as purchase tax for second apartments. However should these purchasers have citizenship from a country signed on a special treaty with Israel about double taxation then their purchase tax will be the same as an Israeli citizen. Examples of such countries are : The United States, England, France, Australia, Holland, Japan etc.
- Purchase tax for a store, a storage unit or a plot of land is 5% of the entire price. There is no discount for Olim.
Example
For example below please find the calculation of the purchase
tax in each of the above instances for a 1,850,000 NIS apartment or house:
Single Residential Apartment or House
- In the first tax bracket (0%) we have 1,350,000 NIS = 0% of 1,350,000 = 0 NIS
- In the next tax bracket (3.5%) we have 251,210 NIS (1,601,210 – 1,350,000 = 251,210) = 3.5% of 251,210 = 8,792 NIS
- In the last tax bracket (5%) we have 248,790 NIS (1,850,000 – 1,601,210 = 248,790) = 5% of 248,790= 12,440 NIS
- TOTAL = 0 + 8,792 + 12,440 = 21,032 NIS
Additional Residential Apartment or House
- In the first tax bracket (5%) we have 1,000,000 NIS = 5% of 1,000,000 = 50,000 NIS
- In the last tax bracket (6%) we have 850,000 NIS (1,850,000 – 1,000,000 = 850,000) = 6% of 850,000 = 51,000 NIS
- TOTAL = 50,00 + 51,000 = 101,000 NIS
New Olim
- In the first tax bracket (0.5%) we have 1,463,035 NIS = 0.5% of 1,463,035 = 7,315 NIS
- In the last tax bracket (5%) we have 386,965 NIS (1,850,000 – 1,463,035 = 386,965) = 5% of 386,965 = 19,348 NIS
- TOTAL = 7,315 + 19,348 = 26,663 NIS
