1/3 or 1/2 of real estate

Under Israeli real estate taxation law, when a person purchases an additional residential apartment (meaning that it is not their only apartment), they must pay purchase tax. The rate of the purchase tax is 8% of the value of the apartment’s value according to the purchase agreement (and if there are no special relations between the buyer and seller). For example, if an additional apartment is purchased for NIS 2 million, the purchase tax will be NIS 160,000.

However, the Knesset (Israeli legislature) chose to benefit a family or an individual that purchases its only apartment compared to those who purchase another apartment, and therefore established lower purchase tax rates applicable to those who purchase their only apartment. To benefit from low purchase tax rates, which apply to those who purchase a single apartment, the buyer must be a “resident of Israel” as defined by the law and the apartment must meet the definition of a “single apartment” in the law.

A “single apartment” for purchase tax purposes can also be considered for those who own up to 1/3 of an apartment or up to 1/2 of an inherited apartment – that is, even if the buyer owns 1/3 of an apartment (or less) or several thirds of an apartment (or less), which are not in the same building, may benefit from reduced purchase tax rates.

Regarding Capital Gains Tax – the Israeli law states that the sold apartment will be considered a single residential apartment owned by the seller (which will be exempted from capital gains tax if it meets the criteria in the law) even if he has, in addition to the sold apartment, a residential apartment in which the seller’s share does not exceed one third and in the case of an inherited apartment – does not exceed half.