Buying a home in Israel should come after you- as a potential buyer- have done plenty of research regarding budget, location, logistics and spoken to the proper real estate agency specializing in working with internationals, such as Montefiore Real Estate Group- Israels finest properties.
Many first-time foreign buyers are compelled to ask questions regarding taxation — and there are several taxes that must be paid. The main taxes for foreign buyers include:
- Purchase Tax: This is a one-time tax that is paid at the time of purchase. The rate varies depending on the type of property and the location, and for foreigners, it will be higher.
- Property Tax: This is an ongoing tax that is paid annually. The rate is based on the value of the property.
- Betterment Tax: This is a one-time tax that is paid when the property is improved or developed. The rate is based on the value of the improvement.
- VAT: Value-added tax (VAT) of 17% is added to the price of new homes in Israel.
- Foreign Currency Control Regulations: Foreigners are required to obtain permission from the Bank of Israel to purchase property in Israel. This permission is required for any purchase of property in Israel, including the transfer of funds for the purchase.
- Capital Gains Tax: This is the tax on the sale ( NOT PURCHASE) of a property by non-residents and it standing at 25%.
Of course, it is advisable to consult with a local real estate lawyer or tax professional to understand the specific taxes and regulations that apply to you personally and based on status. It’s also important to be aware of the potential risks and challenges of buying property in a foreign country.
