preface

8.8.2. Acquisition Tax
BDO Israel
DOING BUSINESS IN ISRAEL
Real estate purchased in Israel is subject to acquisition tax payable by
the buyer. Generally, a 5% tax rate is imposed on the value of real
estate. In a number of limited cases, the applicable tax rate, based on the
purchase price of the asset, is 0%, 0.5%, 3.5%, 6% or 7%. Certain
transactions are eligible for a reduced tax rate.
8.8.3. Betterment Levy
A betterment levy at the rate of 50% is imposed on the increased value
of real estate as a result of changes in building rights. The levy is
payable upon issue of a building permit or disposal of the asset.
8.8.4. Land Betterment Tax
The sale of real estate may be subject to capital gains tax. The
regulations applicable to the sale of real estate are almost identical to
those mentioned above.
The land betterment tax was reduced from November 7, 2001 as
follows:
1) The land betterment tax, accrued up to l November 7, 2001 will be
charged at the marginal rate of up to 45% for individuals and 24%
for companies (in 2011).
2) The land betterment tax, accrued after November 7, 2001 will be
charged at a rate not exceeding 20% for individuals (in 2007
onward), and for companies at the corporate tax rate (currently 24%).
Distribution of land betterment among the various periods will be
implemented on a linear basis.
The sale of residential real estate by individuals is exempt from land
betterment tax if certain conditions are fulfilled.
Specific rules apply to the sale of shares and rights in companies whose
principal assets consist of real estate (“Real Estate Entities”).
8.8.5. Sales Tax
The sales tax was eliminated as of 1.8.2007.
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