Ownership of property and/or land
The Land Authority is the entity which manages land owned by the State of Israel, the Jewish National Fund and the Development Authority, which constitutes about 93% of the entire territory of the State of Israel (which is approximately 22,000 square km), according to the policy
that is made by the board of the Israel Land Administration. The remaining 7% of land in the State of Israel is privately owned.
These land properties are leased to home and property owners for long periods of time, resulting in land being traded as if it were privately owned. However, the indirect government involvement causes much higher bureaucratic and structural obstacles, which constitute a genuine barrier to the development of real estate properties and their preparation for construction. These barriers are considered as one of the key causes of soaring housing prices in Israel. In view of recent social protest and the inability of young Israeli couples to afford a home, the Government of Israel intends to instigate a comprehensive reform in land planning, development and trading rules in Israel.
Land and property taxes
In the State of Israel, taxes that apply to land transactions are: purchase tax, which is imposed on the purchaser, capital gains tax, which is imposed on the seller, and in certain transactions value added tax is also imposed.
The purchase tax rate in a real estate transaction is described above (see taxation section).
In the case of sale of a single home that is owned by the seller, which is being used for residency, there will be an exemption from betterment tax up to an amount of NIS 4,455,000 for a resident of Israel or a foreign resident (on the condition that he does not possess a residential property in a country in which he is not considered as a resident).
The capital gains tax rate on the sale of real estate is 25% if the seller is an individual and 23% if it is a company. In a real estate transaction, VAT will apply if the seller or buyer is a ‘dealer’, at a rate of 17% (in 2020).
Land and property ownership by non-residents
There is no explicit legal restriction concerning the ownership of land in Israel by foreign residents. However, regarding land that is controlled by the Israel Land Authority, a board decision has been made stating that a foreign resident (who does not intend to immigrate to the Israel pursuant to the right of return of the Jewish People) must receive approval from the Chairman of the Board according to a subcommittee that will discuss his request. There is no restriction concerning sale or transfer of privately owned land in the territory of the State of Israel to a foreign resident.