Israel Real Estate tax (For the rest of us)
Real estate tax laws are a jungle in any country. Israeli real estate tax law is no different.
When considering the purchase of a home, there are dozens of factors to take into account, many of which are highly complicated to judge accurately. Will the kids like the local school? Will the price of the property appreciate or depreciate? Is that “minor” plumbing problem a really major one? Most of those factors can only ever be “guesstimates”. The big upside of real estate tax is that, assuming you've done your homework well; it is one factor that is totally predictable before you sign anything.
Generally speaking, Israeli law is geared to help middle and low class families buy and own a residence. To accomplish that, the law gives lower income buyers several important benefits. With good planning, you can potentially complete a full cycle of buying and selling with no tax consequences whatsoever – even if the property appreciated and you made a healthy profit when selling. That said, if you are interested in a high-end property or you own more than one property in Israel, the tax consequences can start getting more severe.
In the following articles I will introduce you to the most pertinent Israeli real estate tax information. Information I feel you will inevitably need to consider when buying and selling a home in Israel. I recommend that you grab a piece of paper and use real-life examples to follow us as we go through the laws.
Let's get started.
In general, you might be liable pay four major taxes:
When buying, the only tax you have to pay is the purchase tax, which can vary from 0% to 5%. We will show you how it works in the following article that will deal with purchase tax.
When selling, you will potentially be subjected appreciation tax, which can go as high as 48% for properties bought decades ago, and the local municipality tax. These taxes apply only in specific cases, and can mostly be avoided in ways we will explain in the following articles. Let's start at the buying, and get into the nuts and bolts of the Israeli property purchase tax.
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