Real estate deals are, by their very nature, complex transactions. When carried out by foreign residents, other distinctive elements are added that make them even more complex - taxation aspects, work with banks in Israel and abroad (in light of the anti-money laundering regulations), coordination and execution of steps with consular parties, and more.
For many years, Jewish foreign residents have focused on the purchase of apartments and real estate properties in Israel. The real estate market in Israel enjoys a consistent and continual increase in property values and fine annual returns. These figures, in addition to world Jewry's understanding that it is important to hold property in Israel as security for a rainy day (which will in the meanwhile serve as a great destination for a long yearly vacation), have made Israel a preferred investment destination.
We specialize in assisting foreign residents in the sale or purchase of property in Israel, and are equipped to provide service that will facilitate the smooth, easy and successful
execution of these transactions.
In recent years there have been various amendments to the tax policy in Israel, and it is vital to know how to prepare and manage them correctly. Land Appreciation Tax Exemption for Foreign Residents - section 49a (a) of the Land Appreciation Tax Law, 1963 grants an exemption from Appreciation Tax that is subject to the sale of a residential apartment by a foreign resident that does not own, or his family member (spouse or child under the age of 18) does not own, a "Residential apartment in the state in which he resides." The Legislature defined that: "For this purpose, a foreign resident shall be deemed to have a residence in the state in which he resides, as long as he has not obtained approval from the tax authorities in his state of residence that he has no such residence". In other words, there is evidentiary presumption that failure to obtain the tax authority's approval establishes a presumption that the seller (a foreign resident) has another residence in his state of residence. In such a situation, the seller is not entitled to exemption from tax for the sale of a qualifying residence, as provided in Chapter 5 of the Real Estate Taxation Law, and in particular, according to section 49b (2) of the Real Estate Taxation Law - tax exemption from the sale of a single residential apartment in Israel.
In practice, it is almost impossible to obtain the required legal approval from the state of residency of the foreign resident. Under these circumstances, the real estate taxation authorities have issued a unique executive order number 5/2013, which stipulates an alternative method for proving the absence of a residence.
Purchase Tax: The Legislature has set purchase tax easement for anyone who has purchased a real estate property for use as a residence or for establishing a business in Israel prior to his immigration to Israel. This tax benefit is relevant to a purchase made over the year prior to immigrating to Israel, and up to 7 years after immigrating to Israel. It is important to plan when and where to buy real estate in Israel in the lead up to immigration.