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Israel Real Estate Taxes

There are a number of taxes in Israel that are applied to real estate.

Purchase Tax
Purchase tax is payable by the purchaser in a real estate transaction. Generally, the tax is between 3.5% and 5%. A reduced tax of 0.5% is payable by an Israeli resident who is purchasing a residential apartment, if it is the only flat he owns. On real estate sales between close members of a family when no money changes hands, purchase tax is 1/3 of the normal rate of tax.

Sales Tax
The above tax was introduced on 1.1.2000 and it applies to the vendor. The tax is 2.5% of the value of the sale or 0.8% on the sale of a residential apartment by a building contractor. The sale of an apartment by a private individual is exempt from sales tax in many cases.

Betterment Tax
When the sale concerns business real estate, or a private apartment that is not exempt from tax, betterment tax is payable. The principles of this tax are very similar to capital gains tax which was mentioned previously.

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