Real Estate Taxation issues in Israel

The corona crisis has gripped the residential real estate market in Israel at a time of strong demand For residential apartments. according to data published by the authorities, it began to return to the track immediately after Passover.

There are 4 significant taxes one should know before buying a flat in Israel. The first type of tax is a purchase tax (mas rechisha), required to pay when purchasing a residential property. If it’s your second or more, you will pay 5% out of its price if it cost up to 1.29 mils’ NIS. It can go all the way to 10% for apartments worth 17.8 mils’ NIS. Tax reduction noted here, while up until recently, investors needed to pay 8% for flats that cost up to 5.34 mil’ NIS. The second type of tax is a capital gains tax (mas shevach), which

the seller must pay for the property they sold unless the property is residential and meets specific criteria. It deals with the profit you made, meaning the price you paid for it while buying, minus the current sale price. it’s essential to know that you can reduce expenses like Brokerage & lawyers fees paid both at purchase and sale. The third type of tax is income tax (mas hachnasa), which a property owner must pay when receiving renters’ money so long as the rental income exceeds a certain

amount. While this amount can vary, it is approximately 5,500 NIS. the fourth is an improvement fee (mas hashbacha), which deals with any changes you in your asset: building another room, adding a porch etc. Those are the main four, but there are some more laws & regulations to know. Please contact us for more relevant info.