Real Estate

Our law office has many years of experience in providing legal assistance to clients in all types of real estate transactions. This area includes a variety of issues, such as the purchase of first home, the acquisition of commercial or investment property, its improvement.

Each of these transactions has its own peculiarities, knowing them you can solve the issue as quickly and efficiently as possible.

Nearly all real estate transactions are subject to tax. When it comes to the purchase of real estate, the purchase tax is paid, when it comes to selling – the income tax is paid. The amount of the tax depends on the specific transaction and type of property. For example, when buying first home for personal residence, tax incentives are provided, and the final amount can be significantly reduced.

Accompanying a sale and purchase transaction by an experienced lawyer will greatly facilitate the process, make the procedure safe and protect against possible troubles in the future, since the purchase of real estate is often one of the biggest purchases in most people’s lives. For such transactions, the law provides a written form and mandatory registration. In case when the transaction is not registered, it is recognized only as liability.

Special attention should be paid to the fact that there is a difference between making a transaction for the acquisition of new real estate, for example, the purchase of a new apartment directly from the developer, and the transaction for the purchase of secondary real estate. Such transactions differ in the method of registration and the stages of registration. It is logical, because unlike an old building, which, as a rule, has already passed all the procedures for division and registration in the real estate register (apartment passport), in case of new buildings this process has not been completed yet. The sole owner of the rights to such real estate is the mortgage company in which it is registered, while secondary real estate is in fact assigned in the register to a specific owner.

As already mentioned, when it comes to buying first home for personal residence, depending on the cost of housing, the law provides a certain limit, up to which the purchase tax is not charged. The general rule is that the more expensive the apartment is, the higher the tax is. The following rules apply here:

• up to 1,919,155 shekels – no tax is charged;
• from 1,919,155 to 2,276,360 shekels – 3.5% of the difference;
• from 2,276,360 to 5,872,725 shekels – 5% of the difference;
• from 5,872,725 to 19,575,755 shekels – 8% of the difference;
• over 19,575,755 shekels – 10% of the difference.

For example, an apartment, the purchase price of which on July 31, 2023 was 3,000,000 shekels, is subject to tax amount of 48,684 shekels:

1. 2.276.360-1.919.155 = 357.205 × 3.5% = 12.502
2. 3,000,000-2,276,360 = 723,640 × 5% = 36,182
3. 12.502 + 36.182 = 48.684

If talking about a seller, then another rule applies. They are responsible for paying income tax. But even here there are some peculiarities. So, when selling the only apartment, the seller is exempt from tax if it is sold 18 or more months after the purchase.

For an apartment to be considered residential, the following conditions must be met:

• its construction is completed;
• it is privately owned and not owned by a company or corporation;
• more than 50% of the dwelling is used for living in one of the following periods:
  • within 4 years before the sale of the apartment;
  • within 80% of the period for which the profit is calculated.

The law also provides benefits for the payment of purchase tax and income tax for the following categories of citizens:

• the disabled;
• the blind;
• Holocaust survivors;
• new returnees.

Thus, to avoid unexpected additional payments of tens of thousands of shekels and for accurate information on the tax amount, it is better to contact a lawyer who specializes in real estate. They will help you calculate possible discounts and tell you about the benefits that you are entitled to in order to reduce or minimize your tax burden, and help you register your property in accordance with the established procedures.