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 1/2/2012 and 31/12/2012
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 1,421,760 NIS | 0% |
| For the portion of the price from 1,421,760 NIS until 1,686,395 NIS |
3.5% |
| For the remaining portion of the price above 1,686,395 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 1,053,200 NIS | 5% |
| For the portion of the price between 1,053,000 and 3,159,600 NIS |
6% |
| For the remaining portion of the price above 3,159,600 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 1,540,855 NIS | 0.5% |
| For the remaining portion of the price above 1,540,855 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 1,421,760 NIS = 0% of 1,421,760 = 0 NIS
- In the next tax bracket (3.5%) we have 264,635 NIS (1,686,395 – 1,421,760 = 264,635) = 3.5% of 264,635 = 9,262 NIS
- In the last tax bracket (5%) we have 163,605 NIS (1,850,000 – 1,686,395 = 163,605) = 5% of 163,605= 8,180 NIS
- TOTAL = 0 + 9,262 + 8,180 = 17,442 NIS
Additional Residential Apartment or House
- In the first tax bracket (5%) we have 1,053,200 NIS = 5% of 1,053,200 = 52,660 NIS
- In the last tax bracket (6%) we have 796,800 NIS (1,850,000 – 1,053,200 = 796,800) = 6% of 796,800 = 47,808 NIS
- TOTAL = 52,660 + 47,808= 100,468 NIS
New Olim
- In the first tax bracket (0.5%) we have 1,540,855 NIS = 0.5% of 1,540,855 = 7,704 NIS
- In the last tax bracket (5%) we have 309,145 NIS (1,850,000 – 1,540,855 = 309,145) = 5% of 309,145 = 15,457 NIS
- TOTAL = 7,704 + 15,457 = 23,161 NIS
