It's time for our annual purchase tax update. Whilst you all know by now that purchase tax on Israeli property is staggered, the property values that the tax rates are applied to are updated on annual basis - in line with inflation
Therefore below we give you 2020's figures, which are important to help you budget properly when buying your next home in Israel!
The regular caveats apply, which is are to make sure to get advice from a qualified tax adviser/real estate lawyer. Furthermore, the tax rates below are correct as of January 1st 2016.
Foreign residents/Second homes (including for Israeli residents)
(i) From 0 – 5,340,425 ILS (of the property price) – 8%
(ii) Above 5,340,426 ILS – 10%
First-time Israeli resident buyer
(i) From 0 - 1,744,505 ILS – 0%
(ii) From 1,744, 506 – 2,069,205 ILS – 3.5%
(iii) From 2,069,206 – 5,338,290 ILS – 5%
(iv) From 5,338,291 – 17,794,305 ILS – 8%
(v) Above 17,794,306 ILS – 10%
Oleh Chadash (New Immigrant)
(i) From 0 – 1,838,615 ILS – 0.5%
(ii) Above 1,838,616 ILS – 5%
Even though we mentioned them last year, it is important to remember the following if you are an Oleh Chadash buying real estate in Israel:
One can claim the oleh rates if one makes Aliyah up to 12 months after purchasing.
In the case of a married couple, only one of the couple need to be an oleh chadash in order to obtain the rates.
An oleh has 7 years with which to utilise the rates.
There can be situations, such as when buying a property for 1,744, 505 ILS or lower, that it makes sense not to use the oleh rates, as for regular first time buyers the rate is less (0%) than the oleh rates (0.5%).
If you are buying more than one property, you will pay the tax on each unit that you buy. The tax is calculated as a percentage of the property price, and is normally paid using a pay slip that is provided by the tax authority. Your attorney will usually obtain this pay slip, as well as ensuring that the correct tax rates are applied by the tax authority.
Given the large sums that can be involved, we can't stress enough the importance of using an attorney that specializes in real estate, and for foreign residents and olim chadashim in particular, one that has experience working English speakers.
Thinking about buying Israeli Real Estate? Get in touch now and we will help you find what you are looking for, help you budget properly, get you financing if necessary, and connect you with the right professionals!