Real Estate Taxation

Land appreciation tax is imposed in the event that a profit is generated from the sale of a real estate right. The profit is the sum of the difference between the selling price of the right and the purchase price, less expenses and plus depreciation. It should be noted that in the event of a loss, no tax will be imposed.

Purchase Tax, also known as the Acquisition Tax, is a one-time tax paid by the buyer when they purchase land or real estate. The purchase tax is triggered when there is a change in ownership. Purchase tax rates are lower for first-time purchasers, Olim Chadashim, and other eligible individuals. However, purchase tax rates are higher for a second home.

The amount you pay is determined by the following factors: Property type (commercial or residential); The property's worth; The buyer's circumstances (first-time buyer, Oleh Chadash, company, etc.)

According to the Real estate taxation law, the buyer is required to pay an advance to the Israel Tax Authority on account of the capital gains tax that the seller is liable for. The advance amount is 15% or 7.5% of the purchase price paid for the transaction (depending on the circumstances). It should be noted that, from the perspective of the Tax Authority, the advance will be considered as if the seller paid it on account of the tax, he is liable for. However, the buyer or seller may submit a request to reduce the advance based on a self-assessment for capital gains tax.

There are certain real estate transactions that will not be considered as a sale for the purposes of the Income Tax Ordinance and the tax imposed under its authority. For example, the acquisition of a right by a trustee, guardian, receiver, or liquidator, the transfer of a real estate right in the context of a divorce, and the transfer of a real estate right through inheritance - are not considered a sale.