Purchase tax along with other costs must be taken into consideration when purchasing a property in Israel. This is especially in light of amendment 75 of the Law of Real Estate Tax beginning on the sixth of May 2013 and continuing until the 31st of December 2014. This amendment affects most real estate purchases, especially for foreign buyers and on luxurious properties (over NIS 4,500,000). Purchase tax is based on a linear scale that corresponds with the purchase price. The tax varies greatly from Israeli residents who currently do not own a property to those purchasing a second home. Foreign buyers are in the same purchase tax bracket as those purchasing a second property, even if they are only purchasing their first apartment. Below is the purchase tax bracket applicable until 31/12/2014
For Israeli Citizens – Purchasing a single property (without owning an additional property).
– Until the amount of NIS 1,470,560: 0%
– On the amount between NIS 1,470,560 – NIS 1,744,270 – 3.5%
– On the amount between NIS 1,744,270 – NIS 4,500,000 – 5%
– On the amount between NIS 4,500,000 – NIS 15,000,000 – 8%
– On the amount above NIS 15,000,000 – 10%
For foreign buyers on any real estate purchase or Israeli residents purchasing an additional residence
– Until the amount of NIS 1,089,350: 5%
– On the amount between NIS 1,089,350 – NIS 3,268,040 – 6%
– On the amount between NIS 3,268,040 – NIS 4,500,000 – 7%
– On the amount between NIS 4,500,000 – NIS 15,000,000 – 7%
– On the amount above NIS 15,000,000 – 10%
Below is an example of the difference between purchasing Israeli residents purchasing a single property and their foreign counterparts (also purchasing a single residence):
– Total purchase tax on an Israeli resident purchasing a single property, without owning additional properties,
in the sum of NIS 1,600,000 = NIS 4,530
– Total purchase tax on a foreign buyer purchasing a single property, without owning additional properties,
in the sum of NIS 1,600,000 = NIS 85,107
Before purchasing a property in Israel it is wise to consult a licensed real estate attorney for information regarding property tax.