When it comes to the tricky subject of taxation and real estate investment, it is essential to seek professional advice. Foreigners no longer benefit from the lower tax bracket they once did, so investors will surely ask themselves what the tax benefits of investing in Israeli real estate are, especially given the increased rates in purchase and appreciation taxes .
5% of the properties in Israel are owned by non-Israeli's living abroad which may seem small as a percentage. However, on closer inspection it's clear to see that, in the main, these properties are at the higher end of the market amounting to a value worth billions of dollars, for a relatively small percentage of homes in number.
Here is a GPI list of benefits for the potential investor who may be on the fence with regards to investing or is simply baffled by all the jargon.
· There is no estate tax in Israel and no gift tax (except from a gift to a foreigner of capital gains and a taxable asset in Israel).
· An exemption from capital gains tax applies to foreign residents on:
1. The clearance of securities enlisted and exchanged on the Tel Aviv Stock Exchange by foreign residents.
2. The sale of shares in an Israeli organization (adhering to certain Terms & Conditions).
· An exemption from income tax applies to foreign residents (or a potentially new settler) on the interest gained through bank deposits.
· An exemption from duty is extended to foreign residents on income from interest and linkage differentials on bonds exchanged on the Tel Aviv Stock Exchange (again, subject to specific Terms & Conditions).
We advise on many of the other intricate benefits available to foreign investors on the endorsed tax exceptions available on:
· land swapping,
· clearing and development exchanges,
· specific exchanges of a gift to a relative,
· heritages,
· exchanges from a trustee to a recipient,
· exchanges to a land relationship ,
· exchanges from a land association under dissolution.
New immigrants are encouraged to Israel with the benefit of qualifying for a reduced purchase tax of 0.5% up to the sum of NIS 1.7 million, and after that, a tax rate of 5%.
In conjunction with the French Tax Administration, a further tax benefit is extended to French nationals allowing the tax on income from property resources in Israel to be paid in Israel. (It's interesting to note that the opposite applies for an Israeli resident who invests in real estate in France ). Profit delivered from land transfer in Israel is taxed in Israel.
While just a snapshot, this ought to illustrate the favorable investment climate for foreign real estate investment.
(...and we are all about a good climate)