Purchase Tax When Buying an Apartment: Relief for a Sole Apartment and a Second Apartment

How the Tax Is Calculated

The tax is imposed upon the purchase of a right in real estate under the 1963 Real Estate Taxation Law. The calculation takes into account the property's value and type, the number of apartments owned by the purchaser, the tax brackets in effect on the transaction date, as well as exemptions and relief. When purchasing a sole residential apartment, an exemption is granted up to a value ceiling that is updated annually, and the amount above it is taxed at progressively increasing rates.

Relief for Certain Purchasers

A person with a permanent medical disability may, subject to meeting the prescribed conditions, pay tax at a rate of 0.5% if the apartment is intended for their residence; the relief may be used no more than twice during their lifetime. When spouses purchase together, this rate applies to the entire property, even if the medical approval was granted to only one of them. New immigrants may also receive a reduced tax rate when purchasing an apartment or business during a period beginning one year before immigration and ending seven years afterward; the relief may be used once for an apartment and once for a business.

A New Apartment Before the Previous Apartment Is Sold

A purchaser who bought a new apartment before selling their previous apartment formally owns two apartments, and therefore the new purchase is generally taxed as a second apartment—at an increased rate from the first shekel. However, a home upgrader may undertake to sell the previous apartment within 18 months of purchasing the new apartment, or within one year from the date the keys are received if the apartment was purchased from a contractor. If the sale is completed on time, the new apartment will be considered a sole apartment; if the deadline is missed, the purchaser will have to pay the difference up to the amount of tax applicable to a second apartment, plus interest and index linkage from the date of the original transaction.

Reporting and Payment Deadlines

The purchaser submits a declaration to the Tax Authority that includes a self-assessment of the tax, which the Authority reviews; if it approves the assessment, it becomes a final assessment. The transaction must be reported within 30 days after the contract is signed, and the tax must be paid according to the self-assessment within 45 days. Even if the purchaser has undertaken to sell their previous apartment at a later date, they must first pay, within 45 days, the amount calculated for a sole apartment.

Latest legal news

• Second suspect remanded in alleged Caucasian mafia boss murder
• Civil Administration demolishes illegal structures near Zemer
• Analysis: impact of ending administrative detention for Jews in West Bank
• Former IDF soldier charged with training for terrorist purposes