Residential property purchase taxes
Israeli law provides for special tax incentives for transactions involving the purchase and sale of residential real estate.
It is important to note that a tax convention has been signed between Israel and Russia, according to which tax discrimination between citizens of Israel and Russia is prohibited in both countries, in particular in matters of taxation of real estate. Thus, Russian citizens in Israel can enjoy many (but not all) of the tax benefits provided for Israeli citizens. It is also important to note article 22 of the Convention, which eliminates double taxation between the two countries.
When an Israeli resident buys his/her only apartment in Israel, the tax is calculated as follows:
The first 1,805,545 NIS will not be taxed.
Amounts between 1,805,545 NIS and 2,141,605 NIS are taxed at a rate of 3.5%.
Amounts between 2,141,605 NIS and 5,525,070 NIS are taxed at a rate of 5%.
Amounts between 5,525,070 NIS and 18,416,900 NIS are subject to a tax of 8%.
The amount of 18,416,900 NIS and above is taxed at a rate of 10%.
It is important to note that the above tax rates apply to residents of Israel.
When buying more than one apartment in Israel or when the buyer of the apartment is not a resident of Israel, the tax on the apartment will be significantly higher:
The first 5,525,070NIS will be taxed at 8%.
Amounts of 5,525,070 NIS and above are subject to 10% tax.
The above amounts are subject to the government and the tax office (authorities) decisions.
It should be noted that all of the above amounts are correct in the case of a purchase of residential property. When purchasing commercial or agricultural real estate, including building land, the tax is calculated differently, usually at the rate of 6% of the purchase price.
In certain situations, the tax rate may be different, up to full exemption from tax, so all the above figures are given for general information and cannot replace the advice of a specialist. Our ENR team, having considered the specific terms of the transaction, will be able to give an accurate estimate of the tax rate, taking into account all the relevant aspects.