Curious to know what you'll pay if you buy or sell an apartment? I've compiled a bunch of FAQs I've come across from my clients.
These are Questions: A year ago, we bought an apartment for the price of a dwelling and recently my husband inherited a quarter of an apartment from his father. We're interested in buying Dad's apartment as a second apartment. What taxes do we have to pay?
In your case, you will have to pay a purchase tax on a second home. A function of the purchase tax rate is determined by the value of the purchased residence, along with the fact that it is an additional residence. For another apartment, the tax rate starts at 8%. Suppose the apartment you purchase is worth NIS 2 million, you purchase three-quarters of it, the purchase tax on that value is 8%, i.e., NIS 120,000.
Meital Question: My husband and I never married and lived in public. We have a complete property separation. My husband owns two apartments and I own one. If I sell my apartment and buy another one, will I be eligible for a tax exemption?
In your case, the ruling states that if you present to the Real estate tax Administration an agreement to balance assets, a prenuptial relationship agreement between spouses, which indicates a clear property separation that separated the apartment being sold from the shared assets, and if in practice you will act according to property separation, i.e., if there is a mortgage then only you pay it, if you live in the apartment you Charge rent from your spouse, if there are renovations in the apartment you pay them, if there is rent it is deposited into your account. As most conditions are met there is a good chance that when you sell the apartment you will get an exemption. If you later want to buy an apartment and maintain a regime of property separation, there is a great chance that the real estate tax manager will give you the low tax rate of the first apartment, i.e. the purchase value rate of up to NIS 1,740,000 you will not pay purchase tax and in the next level you will pay purchase tax as advertised on the website of the Real Estate Tax Authority.
Alex asked.: I have two apartments and I want to sell them and in return buy one big apartment. Will I be charged a tax on the sale of any of the apartments?
Section 49 (e) of the Land Taxation Law provides a solution for those who wish to sell two cheap apartments and buy in exchange for receiving a more expensive third apartment. The conditions are that there are limits. The value of apartments should be limited and they should be really cheap. Suppose you have two apartments that are worth NIS 2 million, and you want to sell them, you have to ask for an exemption under the section. If you buy in return a third apartment worth ¾ of the aggregate value of the two apartments, you will be eligible for a praise tax exemption.
But suppose you have more expensive apartments, in this case I would recommend you sell the first apartment where you are expected to pay a low praise tax, in a better linear tax charge, the tax does not come out high, and the second apartment will later sell as a tax-free single apartment.
My father asked: I want to gift my daughter an apartment worth 1.3 million shekels. If she wants to buy another apartment, what taxes will apply to the transaction?
Again, the tax would be a purchase tax for a second apartment when the tax would be at an altitude that starts at 8% of the first tax rate and can reach 10%. Suppose you bought an additional apartment in the amount of NIS 2 million, the tax would be 8% of the amount, i.e., NIS 160,000 for purchase tax.
Arnon asked: I got an apartment inherited from my mother. It was her only apartment. I am interested in selling the property. Can the tax exemption be passed on to me?
The answer is yes. If your mother owned one apartment and it was a qualifying apartment, and if she sold it she would be tax-free, section 49(b)(5) of the Land Tax Law gives you the option to sell the apartment in full exemption, even if you have many other apartments.
Jordan Question: I want to sell an apartment that was Rented in recent years. The rent was below the tax ceiling so I didn't pay any tax. Since I own another apartment I will be required to pay a tax credit. What level of depreciation will be taken into account in the calculation?
The 2007/5 Tax Directive states that you will have to deduct depreciation from the value of the purchase at a rate of 2% per annum, beginning in 2007 or from the year you purchased the apartment, as of the later date.
Elyad Asked: My wife and I bought a new apartment from a contractor and got it two months ago. And we're interested in selling it and buying another apartment. Under what conditions will we be eligible for a purchase tax exemption?
First of all, with regard to tax, you have to be careful. If you received the apartment only two months ago, the condition for selling it is that it is 18 months from the date you received it. You have to wait another 16 months, sell the apartment. If you buy within another 12 months a replacement apartment you will be entitled to the purchase tax rate as we have discussed. Apartment up to NIS 1,700,000, the step will be exempt and above it there are stairs that are advertised on the website of the Real Estate Tax Authority
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