Taxes: real estate taxation, land appreciation tax and purchase tax.
Under sections 9 and 115 of the Real Estate Taxation (Appreciation, Sale and Purchase) Law, 5723-1963, hereafter the Law, and section 3(f) of the Land Appreciation Tax (Amendment No. 5) Law, 5735-1974, and with approval of the Knesset Finance Committee, I make these regulations:
Chapter I: Interpretation
1. Definitions
In these regulations:
Amendments: 5755-1994; 5783-2023.
Family member of a soldier killed in action: as defined in the Families of Soldiers Killed in Action (Benefits and Rehabilitation) Law, 5710-1950, entitled to benefits, including a deceased soldier's parent and widow who are ineligible because of age or income, and an orphan up to age 50.
Amendment No. 5, 5755-1995.
Building and residential apartment: as defined in section 9 of the Law.
Enterprise: as defined in the Control of Commodities and Services Law, 5718-1957.
Agricultural holding: a holding whose real estate rights belong to an individual, individuals or an agricultural settlement cooperative, and which is the main occupation of that individual, those individuals or the cooperative's members.
Person with a disability: any of the following:
(1) A person under the Disabled Persons (Benefits and Rehabilitation) Law, 5719-1959 [Consolidated Version](opens in a new tab), or the Disabled War Veterans of the Nazis Law, 5714-1954, whose permanent disability assessed under either law is at least 19%.
(2) A person under the Disabled Victims of Nazi Persecution Law, 5717-1957, with permanent disability of at least 50% assessed under that law, entitled to benefits from the State Treasury under it.
(3) A person disabled by a workplace accident within section 103 of the National Insurance Law [Consolidated Version], 5755-1995(opens in a new tab), hereafter the National Insurance Law, entitled to a pension or grant from the National Insurance Institute under Chapter III, whose permanent disability from the accident assessed under that law is at least 50%.
(4) A person under Chapter IX of the National Insurance Law assessed under it as having permanent incapacity to earn a livelihood of at least 75%.
(5) Any of the following, whose disability is assessed under the Income Tax (Determination of Disability Percentage) Regulations, 5740-1979:
(a) A person permanently disabled by a road accident by at least 50%. Road accident has the meaning in the Compensation for Road Accident Victims Law, 5735-1975.
(b) A person with paralysis or an amputated arm or leg whose permanent disability from those impairments is at least 50%.
(c) A person with permanent disability of 100%, or at least 90% from impairments in different organs where that percentage results from a special combined calculation which, without that calculation, would produce disability of at least 100%.
Victim: a victim under the Benefits for Victims of Hostile Acts Law, 5730-1970, whose permanent disability under that law is at least 19%; if the victim died from the hostile act, a family member under that law entitled to benefits, and an orphan up to age 50.
Relative: spouse, including a person who was a spouse during the six months before sale of the real estate right; parent; descendant; descendant's spouse; brother or sister.
Local authority: municipality, local council or local committee under section 3 of the Local Councils Ordinance, and an association of towns.
Chapter II: Purchase tax rates
2. Purchase tax
Amendment No. 2, 5740-1980; Amendment No. 2, 5758-1998.
On sale of a real estate right or an act in a real estate association, purchase tax is payable as a percentage of the right's value:
(1) On sale of a real estate right or an act in a real estate association, except a building or part constituting a residential apartment: 6%.
(1A) Despite paragraph (1), one sixth of the tax paid under it shall be refunded if the following conditions are met, provided the tax was not allowed as an Income Tax Ordinance deduction. Section 103A of the Law applies:
(1) A planning scheme under the Planning and Building Law, here called a building plan, applies to the right sold and permits at least one apartment intended for residential use on the land, hereafter a residential apartment.
Temporary provision, 5784-2024.
(2) A permit under the Planning and Building Law for at least one residential apartment is obtained within 24 months of sale.
Amendment No. 5, 5755-1995.
(2) For a right in a building or part constituting a residential apartment:
(a) Tax is payable on the value at the rate in section 9 of the Law.
(b) If part of an apartment is sold, tax is the corresponding proportion of the tax under subparagraph (a), according to the share sold in the entire apartment right.
(c) More than one residential apartment used together as one residential unit is treated as one apartment.
(d) The buyer shall give the Director an affidavit under section 15 of the Evidence Ordinance [New Version], 5731-1971, that the apartment will be used entirely as one residential unit. If the affidavit is proved false, the declarant owes the tax applicable to the actual facts.
(3) Repealed. (4) Repealed.
Chapter III: Exemptions, reductions and relief
3. Statutory corporations
Amendment No. 2, 5740-1980; 5742-1982; Amendment No. 3, 5743-1983.
(a) The Development Authority, National Insurance Institute, Yad Vashem, Magen David Adom, Institute for Occupational Safety and Hygiene, Employment Service, Ports Authority, Broadcasting Authority and Authority for Construction and Clearance of Rehabilitation Areas pay purchase tax at 0.5%.
Amendment No. 3, 5743-1983.
(b) The Nature Reserves Authority is exempt for land declared a nature reserve or, in the Agriculture Minister's opinion, intended as a nature reserve under section 4 of the National Parks, Nature Reserves and National Sites Law, 5723-1963.
4. National institutions
Amendment No. 2, 5740-1980; 5742-1982; Amendment No. 3, 5743-1983.
The World Zionist Organization, Jewish Agency for Israel, Jewish National Fund, Keren Hayesod United Israel Appeal, United Israel Appeal of Canada, United Israel Appeal Inc. and Himanuta Ltd. are exempt.
5. Custodians of absentee and German property
Amendment No. 2, 5740-1980; 5742-1982.
The Custodian of Absentee Property and Custodian of German Property pay 0.5%.
6. Government housing and rental companies
Amendment No. 2, 5740-1980; 5742-1982; 5777-2016.
The government rental housing company established by Government Resolution No. 770 of 5 Heshvan 5774 (9 October 2013), Prazot Government-Municipal Company for Housing Jerusalem Ltd., Halamish Government-Municipal Company for Housing Rehabilitation in Tel Aviv-Yafo Ltd. and Shikmona Government-Municipal Company for Housing Rehabilitation in Haifa Ltd. pay 0.5%.
7. Soldier welfare associations
5740-1979; Amendment No. 2, 5740-1980; 5742-1982.
The Association for the Wellbeing of Israel's Soldiers and Nikhsei Hayil (NH) pay 0.5%.
8. Local authority
Amendment No. 2, 5740-1980; 5742-1982.
(a) A local authority pays 0.5% where the Director is satisfied the property produces no income and will not do so in future.
(b) If a municipality is established in an area administered by a local council, transfer of a real estate right from the council to the municipality attracts 0.5%. The same applies when a local council replaces a municipality.
(c) Transfer from a municipality or local council to an association of towns of which it is a member attracts 0.5%.
(d) When two or more local authorities merge, transfer from each to the merged authority attracts 0.5%.
9. Public institutions
Amendment No. 2, 5740-1980; 5742-1982.
A public institution under section 61(d) of the Law pays 0.5% if the Director is satisfied the property is or will be used solely and directly by the institution.
10. Repealed
11. Disability, blindness, victims and families of fallen soldiers
Amendment: 5777-2016.
(a) A sale to a person with a disability, a blind person, a victim or a family member of a soldier killed in action for their housing attracts 0.5%. If one of paragraphs (a) to (c) in section 9(c1c)(2) of the Law applies, the rates below apply. Relief at 0.5% under this subregulation is available to any person only twice:
(1) If the value is no more than NIS 2,500,000: (a) no tax on the portion up to the amount in section 9(c1c)(3)(a); (b) 0.5% on the excess up to NIS 2,500,000.
(2) If the value exceeds NIS 2,500,000: 0.5%.
(b) In a joint purchase by spouses where one qualifies as disabled or blind under subsection (a), a victim or a fallen soldier's family member, both receive the 0.5% treatment under subsection (a). If two individuals buy jointly, one qualifies under this subregulation and they marry within 12 months of purchase, the eligible person's spouse receives a refund of tax paid above 0.5%.
(c) Exemption here includes 0.5% treatment and exemption from a real estate transfer fee under an enactment preceding these regulations.
(d) Despite subsections (a) to (c), for vacant land on which more than one apartment may be built under regulations made pursuant to the Planning and Building Law, 5725-1965, in force on the purchase date, 0.5% applies only to the part of the land value attributable to the buyer's own home.
12. Immigrant relief for business premises
Amendments: 5747-1987; 5784-2024.
(a)(1) Immigrant here means a person who entered Israel after 4 Adar 5723 (28 February 1963) and holds: (a) an immigrant visa under section 2 of the Law of Return, 5710-1950; (b) an immigrant certificate under section 3 of that Law; or (c) an A1 temporary residence visa or permit, potential immigrant, under regulation 6(a) of the Entry into Israel Regulations, 5734-1974.
(2) The Finance Minister may designate classes of persons treated as immigrants.
(b) Tax on a sale to an immigrant is 0.5% on the value up to NIS 1,463,035 and 5% on the excess, provided purchase falls between one year before first entry under subsection (a) and seven years after it. The seven years exclude compulsory service as defined in the Israel Defence Forces Permanent Service (Pensions) Law [Consolidated Version], 5745-1985, and civilian service under the Civilian Service Law, 5777-2017. This treatment applies only to business premises, including an agricultural holding, intended for a business in which the immigrant or a relative works.
(c) A joint purchase by spouses, one an immigrant, is treated as a purchase solely by the immigrant. Where two joint buyers, one an eligible immigrant, marry within 12 months of purchase, the immigrant's spouse receives a refund of tax above the amount that would apply had the immigrant purchased alone.
(d) This treatment is available to an immigrant only once.
(e) Deleted.
(f) The amounts in subsection (b) are updated under section 9(c2) of the Law. Base index means the last index published before these regulations commenced.
12A. Immigrant relief for a residential apartment
Amendment: 5784-2024.
(a) A sale of a building or part constituting a residential apartment to an immigrant under regulation 12(a)(1), who meets section 9(c1c)(2)(a) or (b), attracts the following rates if purchased within the period in regulation 12(b). For the one-year period before first entry, where the seller undertakes to complete construction, the construction period is excluded, provided no more than three years pass between purchase and first entry, and one of the documents in regulation 12(a)(1) is granted within one year of purchase:
(1) No tax on the portion up to the amount in section 9(c1c)(3)(a).
(2) 0.5% on the portion above that amount up to the minimum amount in section 9(c1c)(3)(d).
(3) Above that minimum, tax under section 9(c1c)(3).
(b) This treatment is available only once.
(c) No relief under this regulation applies if the value exceeds the amount in section 9(c1c)(3)(e).
(d) Regulation 12(c) also applies with necessary modifications.
13. Relocation to a development area
(a) For subsection (b), a locality in a development area has the meaning in section 8(b) of the Severance Pay Law, 5723-1963; for subsection (c), a development area is designated under section 40D of the Encouragement of Capital Investments Law, 5719-1959. Finance Minister, Labour Minister and Minister of Commerce and Industry include their respective authorised delegates.
(b) If the Labour Minister certifies that an employee or self-employed person, hereafter worker, moved their permanent home to a development locality from outside one or from another development locality, the Finance Minister, on the Labour Minister's recommendation, shall charge 0.5% on a right in an apartment there sold to the worker or spouse as the worker's home.
For vacant land, hereafter plot, sold to that worker or spouse to build the worker's home, the same rate applies on that recommendation if construction starts within 30 months of sale. If regulations under the Planning and Building Law, 5725-1965, in force at purchase permit more than one apartment, 0.5% applies only to the plot value attributable to the worker's home. This relief is available to the worker or spouse only once for that move.
(c) If the Commerce and Industry Minister certifies that an enterprise owner moved the enterprise to a development locality from outside one or from another development locality, the Finance Minister, on that Minister's recommendation, shall charge 0.5% on the real estate right purchased there for the move.
(d) This regulation is valid until 21 Tevet 5757 (31 December 1996).
14. Transfer of rights vested by law
Amendment No. 2, 5740-1980; 5742-1982.
If a right is sold by operation of law to the person specified in that law, and later the right or its consideration is sold to the person who would have owned it without the first sale, the later sale attracts 0.5%.
15. Foreign state
Amendment No. 2, 5740-1980.
(a) If the Foreign Ministry director-general certifies that a foreign state is party to the Vienna Convention on Diplomatic Relations of 18 April 1961 and observes it toward Israel, that state is exempt for property used or intended as its diplomatic mission's office or its head's residence.
(b) On the director-general's recommendation, the Director may grant full or partial exemption, or defer payment, for a non-party state that reciprocates toward Israel.
(c) On the same recommendation, the Director may fully or partly exempt or defer tax on a sale to a foreign state, whether a party or not, if it reciprocates and either: (1) the property is used or intended for diplomatic staff housing or a consular mission's and its staff's office or housing; or (2) the property and its income are intended for religion, culture, education, science or medical treatment.
15A. Foreign-resident public institution
Amendment No. 2, 5751-1991.
A foreign-resident public institution is exempt for real estate association shares received as a gift if the Finance Minister certifies that its country taxes such acquisitions but exempts an Israeli-resident public institution receiving shares in a real estate association resident there as a gift. Public institution has the meaning in section 61(d) of the Law; Israeli resident and foreign resident have the meanings in the Ordinance.
16. Agricultural holding
Amendment No. 3, 5743-1983.
(a) Net value means the holding's real estate value less a building used for residence. Residential building includes the land on which it stands, of an area three times the building's total area.
(b) A right purchased to establish or maintain a holding attracts: (1) on the residential building, tax under section 9 of the Law; (2) on net value up to NIS 299,240, 0.5%; (3) on the excess, 5%.
(c) For several purchases to establish or maintain the holding by the same buyer, spouse or children up to age 18, subsection (b)(2) relief applies only once.
(d) A right purchased for that purpose by a kibbutz, moshav, cooperative moshav, cooperative village or a cooperative associating such bodies attracts 0.5% if intended to serve all or most members.
16A. Indexation and rounding
Amendments: 5758-1997; 5777-2016.
(a) The value set in regulation 16 is adjusted on 16 January, the update day, in tax year 1984 and thereafter, by the increase of the new index over the base index.
(b) Index means the owner-occupied housing price index published by the Central Bureau of Statistics. Base index is 3857.6 points, 1980 average = 100.0. New index is the last published before the update day.
(c) The adjusted value is rounded to the nearest multiple of NIS 5.
(d) The Director shall publish the updated value in the official gazette.
17. Division, subdivision or consolidation of agricultural land
Amendment No. 2, 5740-1980; 5742-1982.
A transfer dividing, subdividing or consolidating land to improve cultivation attracts 0.5% if the Agriculture Ministry director-general or delegate certifies that purpose requires it.
18. Transfer from a foreign company
Amendment No. 2, 5740-1980; 5742-1982.
(a) The Director may charge 0.5% on:
Amendment No. 3, 5743-1983.
(1) A sale from a foreign company to an Israeli company if satisfied both are controlled at the time by the same persons, directly or indirectly, through shares or otherwise.
Amendment No. 3, 5743-1983.
(2) A lease by an Israeli-resident company whose real estate leasing income is business income under the Income Tax Ordinance to a limited partnership whose limited partners are foreign residents, and a simultaneous leaseback of that property to the company.
(b) Company and foreign company have the meanings in the Companies Ordinance.
Amendment No. 3, 5743-1983.
Limited partnership has the meaning in the Partnerships Ordinance [New Version], 5735-1975, whether registered as Israeli or foreign.
19. Transfer between corporations
Amendment No. 2, 5740-1980; 5742-1982.
If satisfied it is just in the circumstances, the Director may exempt all or part of the tax exceeding 0.5% on a sale:
(1) From a corporation established under one law to one under another, if satisfied they are identical in character, purposes and activities, control has not materially changed and no consideration was given.
(2) Between corporations if satisfied they merged, or the buyer was established by merging the transferor with others, and the sale forms part of transferring all merging corporations' real estate rights to the buyer.
19A. Sale to an association by all its rights holders
Amendment: 5763-2002.
(a) Such a sale attracts 0.5% if all conditions hold: (1) landowners receive association rights in proportion to their real estate shares; (2) the transfer meets an Investment Centre Administration requirement under the Encouragement of Capital Investments Law, 5719-1959, hereafter the Encouragement Law; (3) the building has approval as a rental building or new rental building under Chapter VII1 of that Law.
(b) If a condition in section 53(b) of the Encouragement Law is not met, relief is cancelled retroactively. The buyer owes the tax otherwise payable, plus indexation and interest from the end of the tax year of acquisition.
20. Sale to a relative
Amendment No. 2, 5740-1980; Amendment No. 3, 5743-1983.
A transfer without consideration from an individual to a relative attracts one third of ordinary purchase tax.
20A. Repealed
21. Sale to a spouse
Amendment No. 2, 5740-1980; Amendment No. 3, 5755-1994.
Despite regulation 20, a residential apartment right transferred without consideration to a spouse living there with the transferor is exempt.
22. Renunciation of a real estate right
Amendment No. 2, 5740-1980.
Renunciation of an inherited real estate right in favour of the deceased's spouse is exempt.
23. Partition of land
Amendment No. 2, 5740-1980.
On partition of one parcel among co-owners other than according to their previous shares, tax is payable only on the acquired value exceeding the person's pre-partition value.
24. Land and attachments
Amendment No. 2, 5740-1980; 5742-1982.
A transfer to register land and its attachments, previously separately registered under section 157 of the Land Law, 5729-1969, as one unit attracts 0.5%.
25. Repealed
26. Sale to a bankrupt debtor
Amendment No. 2, 5740-1980; 5742-1982.
A sale to a bankruptcy trustee and a sale by that trustee back to the debtor each attract 0.5%.
27. Exemptions for certain sales
Amendment No. 2, 5740-1980; Amendment No. 3, 5743-1983.
(a) A sale exempt under sections 54, 55, 57, 64, 65, 66, 67, 68 or 69 of the Law is exempt from purchase tax.
(b) A sale from an association to an individual is exempt if the association owned the right on the official publication date of the Land Appreciation Tax (Purchase Tax) (Amendment) Regulations, 5743-1983, and the sale is exempt under section 71 of the Law.
(c)(1) Successive association-to-association sales followed within six months of the first sale by a sale to an individual are exempt if: (1) all sales are exempt under section 71; (2) the first seller owned the right on 16 Tammuz 5743 (27 July 1983).
(2) If those conditions hold but only part of the right reaches an individual, exemption applies only to transfers of that part.
(d)(1) If association rights holders declare to the Director that a transfer between associations is part of a comprehensive plan ending in transfer to an individual, and to their knowledge all sales will meet subsection (c), the acquiring association may withhold purchase tax before later conditions are met, provided it gives a payment guarantee satisfactory to the Director.
(2) If declared conditions are not met, the association owes the exempted tax plus indexation and interest from its original due date to actual payment.
(e) Listing a real estate association's securities for trading on a stock exchange as defined in the Ordinance is exempt.
(f) On liquidation of a real estate association whose shares are deemed sold under section 93 of the Ordinance by the Real Estate Taxation (Appreciation, Sale and Purchase) (Application of Ordinance Provisions to Liquidation of Certain Real Estate Corporations) Regulations, 5764-2004, the association transaction is exempt.
27A. Sale of a right received in liquidation
Amendment: 5770-2010.
A real estate right or real estate association right acquired in a sale exempt under section 71, on which purchase tax was paid, the first liquidation, is exempt on resale if: (1) no more than six months passed from that liquidation to sale; (2) the sale is exempt under section 71.
28. Recovery where relief conditions fail
Amendment No. 2, 5740-1980; 5742-1982; 5763-2002.
(a) If a sale received 0.5% treatment and the Director later finds all or some conditions unmet, the Director shall recover all or part of the tax relieved from its recipient, according to the circumstances.
(b) If tax was paid under regulation 19A(a) and relief is retroactively cancelled under 19A(b), the Director shall recover from the seller to whom 19A applied the tax otherwise payable, plus indexation and interest from the end of the tax year in which the right was sold to the association.
Chapter IV: Miscellaneous
29. Transitional provisions
(a) Exemptions, reductions or other relief granted before commencement under the Land (Fees) Regulations, 5730-1970, remain valid.
(b) For relief on earlier sales, powers under those regulations held by the Commissioner of Revenue, director-general, commissioner or inspector pass to the Director.
(c) A person who paid a fee under those regulations but whose right is not yet registered in the Land Registry is exempt.
(d) A precommencement sale whose registration would have attracted regulation 22(b) of those regulations but for their repeal attracts purchase tax of 40 Israeli pounds.
30. Commencement
These regulations commence with the Land Appreciation Tax (Amendment No. 5) Law, 5735-1974.
31. Citation
These regulations shall be called the Land Appreciation Tax (Purchase Tax) Regulations, 5735-1974.
7 Heshvan 5735 (23 October 1974)
Yehoshua Rabinovitz, Minister of Finance
The information on this page is general information and is not legal advice.