Israeli real estate taxes among world's lowest

Accounting firm Baker Tilly reports that Israelis pay less taxes on real estate deals compared with other countries.

But there is a fly in the ointment. The relatively low taxes on buying and selling, compared with the rest of the world and with other investment options, have made Israel's housing market a paradise for investors. These investors are fuelling the market, increasing demand in recent years (clearly encouraged by low interest rates) and have been a significant factor in home price rises. Consequently young couples looking to buy an apartment - which still includes 30% in taxes - have little to console them.

The taxes examined are purchase tax paid on purchase of a property, tax on rental (by maximum tax bracket), and capital gains tax on the sale of a property. Israel was compared with Canada, Australia, Spain, Russia, the US, France and Japan.

For the purposes of the comparison, an imaginary apartment was purchased for NIS 1.5 million, assuming that NIS 48,000 rent could be obtained annually for a NIS 4,000 per month (3.2% return). The apartment was then sold for NIS 1.8 million. First hand and second hand apartments were calculated separately.

Source: Globes.co.il