Israel: Taxes and Costs
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Effective income tax
rates are low in Israel
Effective Tax Rate on Rental Income |
|||
| Monthly Income | US$1,500 | US$6,000 | US$12,000 |
| Tax Rate | 7.5% | 7.5% | 7.7% |
| Click here to see a worked example | |||
Source:
|
Disclaimer | ||
INDIVIDUAL TAXATION
Non-resident individuals are liable to pay tax on their income and capital gains derived from Israeli sources. Married couples can opt for joint or separate taxation.
INCOME TAX
Income and capital gains taxed at progressive rates. Different tax bands and tax rates apply for taxpayers under 60 years old and for taxpayers over 60 years old.
INCOME TAX 2007 |
|
| TAXABLE INCOME, NIS (US$) | |
| Up to 136,920 (US$35,140) | |
| 140,640 – 202,080 (US$51,848) | |
| 202,080 – 435,120 (US$111,640) | |
| Over 435,120 (US$111,640) | |
| Source: Global Property Guide | |
INCOME TAX 2007 |
|
| TAXABLE INCOME, NIS (US$) | |
| Up to 52,680 (US$13,516) | |
| 52,680 – 93,720 (US$24,046) | |
| 93,720 – 140,640 (US$36,084) | |
| 140,640 – 202,080 (US$51,848) | |
| 202,080 – 435,120 (US$111,640) | |
| Over 435,120 (US$111,640) | |
| Source: Global Property Guide | |
RENTAL INCOME
Rental income tax earned by non-resident foreigners can be taxed in two ways.
It can be taxed using the flat-rate option wherein the gross rental income is taxed at a flat rate of 10%. No deductions are allowed when this option is chosen.
The other option is to be taxed at progressive rates. The taxable income is computed by deducting income-generating expenses from the gross income. Allowable deductions are depreciation, building insurance, municipal duties, management charges, maintenance and repairs. Depreciation rate is 2% per annum.
CAPITAL GAINS
Most properties sold in Israel are exempt from capital gains tax. If the gains are taxable, the net gain is taxed at the standard income tax rates.
Acquisition Tax
Buyers of Israeli real property may be subject to acquisition tax (transfer fee) levied at progressive rates on the property value at the time of the transfer. Different tax bands and rates apply to the first acquired property and to the succeeding properties acquired.
ACQUISITION TAX FOR FIRST |
|
| TAX BASE, NIS (US$) | |
| Up to 907,700 (US$232,891) | |
| 907,700 – 1,275,690 (US$327,307) | |
| Over 1,275,690 (US$327,307) | |
| Source: Global Property Guide | |
ACQUISITION TAX FOR SUCCEEDING PROPERTIES |
|
| TAX BASE, NIS (US$) | |
| Up to 772,310 (US$198,153) | |
| Over 772,310 (US$198,153) | |
| Source: Global Property Guide | |
PROPERTY TAX
Property taxes are no longer levied in Israel.
CORPORATE TAXATION
INCOME TAX
Income-generating expenses are all deductible when computing for the taxable income. Income and capital gains derived by corporations are taxed at a flat rate of 27%. This rate is only applicable for 2007 and should be reduced gradually to 25% until the year 2010.
Israel - more data and information
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