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.
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 907,700 NIS
|For the portion of the price from 907,700 NIS until 1,275,690 NIS
|For the remaining portion of the price above 1,275,690 NIS
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 772,310 NIS
|For the remaining portion of the price above 772,310 NIS
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 1,165,670 NIS
|For the remaining portion of the price above 1,165,670 NIS
See example below
- 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.
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For example below please find the calculation of the purchase tax in each of the above instances for a $450,000 apartment or house:
- Get the representative dollar exchange rate for the date of the contract. (We will use 4.2 for our example.)
- Calculate the shekel price: $450,000 x 4.2 = 1,890,000 NIS.
- In the first tax bracket (0%) we have 907,700 NIS = 0% of 907,700 = 0 NIS
- In the next tax bracket (3.5%) we have 367,990 NIS (1,275,690 – 907,700 = 367,990). = 3.5% of 367,990 = 12,880 NIS
- In the last tax bracket (5%) we have 614,310 NIS (1,890,000 – 1,275,690 = 614,310). = 5% of 614,310 = 30,715 NIS
- TOTAL = 0 + 12,880 + 30,715 = 43,595 NIS
- In the first tax bracket (3.5%) we have 772,310 NIS = 3.5% of 772,310 = 27,031 NIS
- In the last tax bracket (5%) we have 1,117,690 NIS (1,890,000 – 772,310 = 1,117,690). = 5% of 1,117,690 = 55,884 NIS
- TOTAL = 27,031 + 55,884 = 82,915 NIS
- In the first tax bracket (0.5%) we have 1,165,670 NIS = 0.5% of 1,165,670 = 5,828 NIS
- In the last tax bracket (5%) we have 702,160 NIS (1,890,000 – 1,165,670 = 724,330). = 5% of 724,330 = 36,216 NIS
- TOTAL = 5,828 + 36,216 = 42,044 NIS
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