Purchase Tax (מס רכישה), otherwise referred to as Stamp Duty Land Tax (SDLT) or Acquisition Tax, is as a one-off tax charge paid by the buyer on the purchase of land or real estate. The purchase tax is triggered each time there is a change in ownership. This article is about מס רכישה – purchase tax rates in Israel on residential property purchased by an individual. How much you actually pay is calculated based on the following criteria:
– Type of property (commercial or residential)
– The value of the property
– The circumstances of the buyer (first-time buyer, Oleh Chadash, Company, etc.)
There are lower rates of purchase tax for first-time buyers, Olim Chadashim, and other eligible persons. However, the purchase tax rates in Israel are higher on a second property.
Israeli Residential Property – Purchase Tax Rates
Purchase Tax on Israeli property is calculated using the Purchase Tax brackets. Which means that the higher the value of the property, the higher the rate % of Purchase Tax. However, the value of the property which falls into the lower brackets are still taxed at lower rates, with only the surplus value taxed at the higher rates. A bit confusing? That is why we have examples!
First time buyer (or buying your only residential property)
The Purchase Tax Rates in Israel for an individual purchasing their first or only residential property are as follows (until 15/1/2024):
|Value of the property (in NIS) – from||Value – up to||Rate of Purchase Tax|
Purchase of a single residential apartment in the amount of NIS 2,800,000:
- For the part of the value up to NIS 1,919,155 – no tax will be paid
- Then, for the part of the value that exceeds NIS 1.919.155 and up to NIS 2,726,360 tax will be paid at the rate of 3.5% = 28,252
- And for the part of the value that exceeds NIS 2,726,360 and up to NIS 2,800,000, tax will be paid at the rate of 5% = 3,682
- So, the total purchase tax payable will be: NIS 31,934 (0 + 28,252+ 3,682)
Purchase tax Rates for individuals who already own another property.
For an individual that already owns an interest in a residential property (as per the definition of the law), the rates of Purchase tax will be higher. So, people who don’t yet own a property have a little advantage. To find out more, read our article on Purchase Tax for on second properties here.Income tax on Israeli rental income
Purchase Tax for Olim Chadashim
An Oleh Chadash can benefit from reduced rates of Purchase Tax. But, they meet the following conditions in order to be eligible:Purchase tax rates for Olim Chadashim
Want to calculate how much מס רכישה you’ll have to pay?
The Israeli Tax Authority have built a Purchase Tax calculation simulator just for you. The simulator is in Hebrew and whilst it can be used to provide a general guide to how much stamp duty you’ll have to pay, it’s always recommended that you take professional advice for an accurate result.
It can often be more tax efficient for an Oleh Chadash to purchase a home in Israel using the Purchase tax brackets of a single property buyer. Usually this occurs when the value of the property is below NIS 5,000,000. So, if an Oleh Chadash is considering buying two properties, in order to make full use of all their benefits attention should be paid to which property is purchased first.