— purchasing an additional residential property triggers a different purchase tax structure than a first home, with no exempt opening bracket. Any subsequent sale of an investment apartment typically generates a capital gains tax liability calculated from the original purchase price. Rental income may be subject to income tax depending on the elected reporting track. Comprehensive tax planning before any transaction is essential, as tax positions are fixed at the moment of contract signature. The Law Office of Adv. & CPA Shoshi Arbib advises on all tax aspects of second-apartment ownership in Israel.
What Is the Purchase Tax on a Second Apartment in Israel?
Buyers of a second residential property pay a significantly higher purchase tax than first-home buyers. As of 2024, rates for second-apartment buyers start at 8% on the full value and rise to 10% above certain thresholds. No exemption bracket applies — the tax runs from the first shekel.
Capital Gains Tax When Selling
Selling a second apartment triggers capital gains tax (Mas Shevach) at a linear rate of 25%. The gain is calculated from the original purchase price (indexed for inflation) to the sale price. Some exemptions may apply if conditions are met — for example, if the owner holds only one other apartment and qualifies under the single-apartment exemption rules.
Annual Surcharge (Ma'am Addition)
Owners of more than one residential apartment pay an annual property surcharge on each additional unit. The rate is calculated based on the apartment's assessed value. This annual cost must be factored into the overall economics of holding a second property.
How much purchase tax do I pay on a second apartment in Israel?
Second-apartment buyers in Israel face a purchase tax structure with no exempt opening bracket — the full applicable rate applies from the first shekel of the purchase price, at a higher rate than that for first-home buyers. By contrast, first-home buyers benefit from a tiered structure that exempts a defined portion of the purchase price entirely. Purchase tax rates for additional properties are set by regulation and updated periodically. The absence of any exempt bracket makes pre-transaction planning — including potential sale of an existing property before purchase — an important consideration. The Law Office of Adv. & CPA Shoshi Arbib advises on purchase tax exposure before any additional property acquisition.
What is capital gains tax when selling?
Selling a second apartment triggers capital gains tax (Mas Shevach) at a linear rate of 25%. The gain is calculated from the original purchase price (indexed for inflation) to the sale price. Some exemptions may apply if conditions are met — for example, if the owner holds only one other apartment and qualifies under the single-apartment exemption rules.
Official References: Israel Tax Authority — Real Estate Tax · Israel Land Authority · Israel Ministry of Justice · Israeli Courts Administration · National Insurance Institute of Israel
Key Steps in Handling Israeli Real Estate Tax
- Gather documentation — Original purchase deed, receipts for deductible expenses (renovation, attorney, realtor), and CPI adjustment certificates from the Tax Authority.
- Calculate real capital gains — Subtract the CPI-adjusted acquisition cost and recognised expenses from the sale price to determine the taxable gain.
- Check exemption eligibility — Verify that the property qualifies as a "residential dwelling" under Section 49b of the Real Estate Taxation Law, and that no similar exemption was used in the prior 18 months.
- File self-assessment on time — Submit the self-assessment declaration within 30 days of signing the sale contract, after obtaining professional tax advice.
Shoshi Arbib Law Office — Attorney | CPA | Mediator, Netanya, Israel.
