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Costs
When buying a property the following are the costs that must be taken into account:
Real Estate Broker's Commission
On the purchase or sale of property, brokers customarily charge 2% of the inclusive price of the property. Value Added Tax is added to any commission due.In total this is equivalent to 2.32%
Lawyer's Fees
Most lawyers charge 1% + V.A.T. (equivalent to 1.16%)
Purchase Tax
The Purchase Tax in respect of a residential dwelling is an incremental (progressive) tax. This tax must be paid within 50 days of signing a contract. In order to calculate the tax, the total purchase price of the dwelling is divided into various brackets and a different rate of tax is applied to each bracket.
The range of each bracket is now adjusted every 12 months in sheqel terms in accord with changes to the Israeli Consumer Price Index and at present is closely equivalent to the following
Bracket 1 (0.00%) - First $290,000
Bracket 2 (3.50%) - Next $120,000
Bracket 3 (5.00%) - Remainder of Purchase Price
However when purchasing a second residential property the rates are different:
Bracket 1 (0.00%) - First $410,000
Bracket 2 (5.00%) - Remainder of Purchase Price
New Immigrant (Oleh) or a Temporary Resident holding a B-1 visa, pays a reduced rate of Purchase Tax equivalent to 0.5% on the first $370,000 (approximately) of the purchase price of a residential property purchased within seven years of Immigration (Aliyah). On amounts above the first $370,000 the purchase tax rate reverts to 5.00%.
In the event that the Immigrant wishes to purchase the residence prior to making Aliyah, the reduced rate will also apply if the purchase is made within one year prior to the date of Immigration. In this case, the tax must be paid in full and the excess will be refunded with proof of Aliyah.
On Selling take into account just the Lawyers and Real Estate Agents Costs as above.
You could be liable for Profits (Capital Gains) Tax see here