The government has approved new legislation to fight real estate price rising. Two provisions apply to individuals who are foreign residents, canceling tax reliefs for single home sale or purchase.

Purchase Tax

A non Israeli resident will not be entitled to the low tax rate that is granted for purchase of a single home in Israel. The tax rate that will apply will be the same rate that applys for purchase of an additional home, starting at 5% and up to a marginal 10% tax rate for homes purchased for over 15 Million Shekel.

However, if one immigrates to Israel by making ALIYA within two years of purchase, they will be entitled to a tax refund, benefiting the reduced tax rate of a single home.

Betterment Tax

According to the Israeli law one may sell his only and single home in Israel once every eighteen months with a full tax exemption.

Please note that this exemption applies only when the selling price is no higher than 4.5 million shekels. Above 4.5 million shekels betterment tax will be applied.

In the case of foreign residents this exemption will be granted only if proven that the individual does not own a home in his country of residence. The Israel Tax Authority will accept such a statement only from the tax authorities of the country of residency.
 

* In order to get proper tax planning it is recommended to get personal professional tax advice. This article is not a substitute for legal consultation. Legal advice should be sought in accordance with the particular circumstances.