The purchase tax for real astate remains almost unchanged since the Housing Services Index rose by 0.2%

The purchase tax for real astate  remains almost unchanged, according to the Tax Authority's announcement, which updates the purchase tax levels annually in accordance with the Tenant-Owned Housing Services Index. The index rose by only 0.2% this year, so that the change in the purchase tax will hardly be felt in practice and this means that an investor (who owns more than one apartment) who purchased an apartment worth NIS 2.2 million will now pay a negligible additional sum of NIS 24. The tax bracket for the purchaser of a single residential apartment came into effect from January 15, 2020 to January 16, 2021.
When it comes to purchasing a single apartment, the increase in the index actually works in its favor and it reduces the payment of tax. As the index rose, the amount from which homebuyers will be required to pay tax also rose. For example, in the case of a single residential apartment - if in 2020 no tax was paid on value up to NIS 1,744,505 million from the price of the apartment, then from now on no tax will be paid on value up to NIS 1,747,865 million from the price of the apartment. For example, when purchasing a single residential apartment worth NIS 2.2 million, a purchase tax of NIS 17,727,000 will be paid, a decrease of NIS 178 (before the update, a tax of NIS 17,905,000 was paid for the same apartment).
In contrast to the negligible changes in the index, during 2020 the state, at the initiative of Finance Minister Israel Katz, made a dramatic change in the purchase tax for investors and reduced it from 8% to 5%. The move came after the stated policy of two previous finance ministers: Lapid and Kahlon, was to burden investors. Lapid did this by dividing it by purchase tax brackets, and Kahlon raised the purchase tax. The policy of the two is intended to reduce the number of investors as much as possible and thus conquer some of the demand created in the market. Kahlon's decision was made as part of a temporary order that was supposed to end only at the end of 2020, but Minister Katz preceded the move that now came during the Corona period and was intended to bring in money from the state and tax the market in times of crisis. Before the change, the buyer of the apartment paid 8% up to the amount of NIS 5.34 million and for the difference above this amount he will pay tax at the rate of 10%. In the case of an investor for the purchase of a residential apartment (which is not a unit) in the amount of NIS 2.2 million, he will be charged a tax payment of NIS 119,053,000, compared to NIS 119,077 million before the change. A year ago, during a period when the purchase tax was 8%, the investor would pay NIS 176,000 for the same apartment.
Tax brackets for the buyer of a single apartment:
1. No tax will be paid on the part of the value up to NIS 1,747,865
2. On the part of the value that exceeds NIS 1,747,865 and up to NIS 2,073,190 - 3.5%
3. For the part of the value that exceeds NIS 2,073,190 and up to NIS 5,348,565 - 5%
4. For the part of the value that exceeds NIS 5,348,565 and up to NIS 17,828,555 - 8%
5. For the part of the value that exceeds NIS 17,828,555 - 10%
Investor tax brackets (for which this is not a single apartment):
1. On the part of the value up to NIS 1,294,770 - 5%
2. On the part of the value that exceeds NIS 1,294,770 and up to NIS 3,884,295 - 6%
3. For the part of the value that exceeds NIS 3,884,295 and up to NIS 5,348,565 - 7%
4. For the part of the value that exceeds NIS 5,348,565 and up to NIS 17,828,555 - 8%
5. For the part of the value that exceeds NIS 17,828,555 - 10%