When one purchases an apartment in Israel he is subject to purchase tax. These sums are updated annually. The tax has been recently updated to the following amounts, which are applicable for the period of January 16, 2017 until January 15, 2018:
The purchase tax rates for Israeli residents purchasing a single home are:
|
Apartment Value |
Tax Rate |
|
Up to- NIS 1,623,320 |
0% |
|
From - NIS 1,623,320 until NIS 1,925,460 |
3.5% |
|
From– NIS 1,925,460 until NIS 4,967,445 |
5% |
|
From- NIS 4,967,445 until NIS 16,558,150 (USD 1,302,920/ £1,056,540 until USD 4,343,060/ £3,521,780) |
8% |
|
Over NIS 16,558,150 USD 3,343,060/ £3,521,780) |
10% |
The tax rates for foreigners and for Israeli's purchasing an additional home are as follows:
|
Apartment Value |
Tax Rate |
|
up to NIS 4,967,445 (USD 1,302,920/ £1,056,540) |
8% |
|
above NIS 4,967,445 |
10% |
In addition in the event of an exchange where one purchases a second home with the intention to sell his original home, there is a time period of 18 months after the purchase, in which one may sell his first home and pay purchase tax on the second home by the reduced rate of a single home.
Alongside the general tax concessions described above, there are particular tax reliefs that apply in cases such as a gift transfer amongst relatives, where the receiver will be required to a third of the usual tax rate.
Another tax relief is in a case of purchase by an "Oleh" (an individual requesting resident by virtue of the statute of return) in which the tax rate will be:
|
Apartment Value |
Tax Rate |
|
up to NIS 1,759,310 (USD 461,452/ £374,191) |
0.5% |
|
above NIS 1,759,310 |
5% |
This exemption can be used starting one year before receiving residency, and ends seven years afterwards.
Capital Gains (CG) Tax:
CG tax will apply whenever there is a value difference between the original purchase price and the current sale price (not including inflation increase). CG tax is imposed on a seller of a property on the amount of the appreciation.
The CG tax exemption which allows an Israeli resident to sell a residential property once every four years with a full tax relief was canceled on January 1, 2014. The only tax exemption that remains is in a case of an Israeli individual that owns a single home which is his only property in Israel. In this case, he may sell his only home in Israel once every eighteen months with a full tax exemption on any profit gained.
Please note that this exemption applies only when the selling price is no higher than 4,443,000 shekels. Above the amount mentioned, CG tax will be applied even if the selling is of a single home.
The above is a loose translation from a publication in Hebrew by the Israeli Tax Authorities Assessment and Review Division and the Unit for Information and Public Relations, January 2017.
The content of this article is intended to provide a general guide to the subject matter and is not a substitute for legal consultation. Specific legal advice should be sought in accordance with the particular circumstances.