 Good news at the end of the summer The public does not like to pay taxes, particularly those perceived as unreasonable. Purchase tax is one of such taxes, the reasoning behind it is doubtful. What is the reason for paying taxes on purchasing a house in Israel? What is the reason for paying a Purchase tax on the house, when the money you bring into the deal was already taxed? The public and those engaged in the real estate activity, such as the Association of Building Contractors, continuously protest against the Purchase tax and its rate. Now, following the intensive initiative of the Association of Building Contractors, headed by its president Mr. Nisim Bublil and the CEO Mr. Yosi Gordon, the government announced the cancellation of the Sales tax and on increased grading of tax-brackets of Purchase tax for a single apartment. What's the meaning of this decision? If you purchase an apartment (or a house) in the amount not higher then 850,000 NIS, and it is your only adobe, you will be exempt from paying any tax at all! In Zihron Ya'akov, Binyamina and the surrounding area there aren't many houses on offer, however the good news do not apply solely to those purchasing apartments in cheaper areas. If you are about to purchase a house that costs more then 850,000 NIS, you will not pay any taxes on the first 850,000 NIS. On the sum ranging between 850,000 NIS, and 1,300,000 NIS you will get a discount and will pay 3.5% in taxes (in place of 5%), and only the remainder of the sum - above 1,300,000 NIS, a full 5% tax will be paid. Regarding sales tax: we are talking about the remaining sales tax that applies to the land purchased until 2001. The rest of the tax has been cancelled in the past. The main points of the decision: a full tax - bracket was raised to 850,000 NIS (in place of 600,000 NIS up until now); a tax - bracket of 3.5% is now applicable to the sum of 850,000 NIS to 1,300,000 NIS (in place of 600,000 to 748,000 NIS up until now). The meaning of the decision: the buyer of an apartment that costs 1,300,000 NIS (about $307,000) will save 17,000 NIS, relative to the current situation, and about 49,000 NIS relative to someone paying a full tax (for example, a purchaser of a second apartment).Quite a considerable saving! The application of the law: August 1, 2007, and (we saved the best for last!) the law applies retroactively - those of you who purchased an apartment after August 1 will enjoy the new tax - bracket! | Israel Purchase Tax Rates | From amount | Up to | Full | | Prior | | Now | | ₪ 0 | ₪ 600,000 | 5.0% | ₪ 30,000 | 0.0% | ₪ 0 | 0.0% | ₪ 0 | ₪ 600,000 | ₪ 748,000 | 5.0% | ₪ 7,400 | 3.5% | ₪ 5,180 | 0.0% | ₪ 0 | ₪ 748,000 | ₪ 850,000 | 5.0% | ₪ 5,100 | 5.0% | ₪ 5,100 | 0.0% | ₪ 0 | ₪ 850,000 | ₪ 1,300,000 | 5.0% | ₪ 22,500 | 5.0% | ₪ 22,500 | 3.5% | ₪ 15,750 | | | סה"כ | ₪ 65,000 | | ₪ 32,780 | | ₪ 15,750 | ₪ 1,300,000 | And up | 5.0% | | 5.0% | | 5.0% | |
A version of this article by Yoav Etiel appeared in Magazine Hamoshavot Yoav Etiel is a Partner at BarEl Properties Group (C) 2007 Copyright BarEl Properties Group, Ltd.
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