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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 16/1/2010 and 15/1/2011

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 1,084,935 NIS	0%
For the portion of the price from 1,084,935 NIS    until 1,524,770 NIS	3.5%
For the remaining portion of the price above    1,524,770 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 923,070 NIS	3.5%
For the remaining portion of the price above    923,070 NIS	5%

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 1,393,220 NIS	0.5%
For the remaining portion of the price above    1,393,220 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.

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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 1,084,935 NIS
  
    = 0% of 1,084,935 = 0 NIS
  
  
• In the next tax bracket (3.5%) we have 438,835 NIS (1,524,770 - 1,084,935 = 439,835).
  
    = 3.5% of 439,835 = 15,394 NIS
  
  
• In the last tax bracket (5%) we have 325,230 NIS (1,850,000 - 1,524,770 = 325,230).
  
    = 5% of 325,230 = 16,261 NIS
  
  
• TOTAL = 0 + 15,394 + 16,261 = 31,655 NIS

Additional Residential Apartment or House

• In the first tax bracket (3.5%) we have 923,070 NIS
  
    = 3.5% of 923,070 = 32,307 NIS
  
  
• In the last tax bracket (5%) we have 873,500 NIS (1,850,000 - 923,070 = 926,930).
  
    = 5% of 926,930 = 46,346 NIS
  
  
• TOTAL = 32,301 + 46,346 = 78,653 NIS

New Olim

• In the first tax bracket (0.5%) we have 1,393,220 NIS
  
    = 0.5% of 1,393,220 = 6,966 NIS
  
  
• In the last tax bracket (5%) we have 456,780 NIS (1,850,000 - 1,393,220 = 456,780).
  
    = 5% of 456,780 = 22,839 NIS
  
  
• TOTAL = 6,966 + 22,839 = 29,805 NIS

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