How Can Foreign Residents Buy or Sell Real Estate in Israel
without Paying Israeli Taxes?
Israeli real estate tax only applies to real estate transactions in Israel that are made within its pre-1967 boundaries. As such, the taxes that are charged upon selling or purchasing land or apartments in the Judea and Samaria region (Over the "Green Line"), become personal taxes and not real estate taxes. According to certain criterion these personal taxes apply only to Israeli citizens. In other words, foreign citizens who are not Israeli citizens are, in most cases, exempted from paying Israeli personal and real estate taxes on the purchase and sale of real estate in Judea and Samaria. Please note, we are focusing only on Israeli taxes. Please advise with your foreign based attorney or accountant as to what taxes you must pay in your country of origin on this real estate transaction.
How are Israeli citizens defined under Israeli tax law?
Section 16a of the Israeli Real Estate Tax Law defines an Israel citizen as one of the following:
One who is entitled to register or is registered already in the Israeli Ministry of Interior.
An Israeli resident.
One who is entitled to immigrate according to Law of Return (Hok Ha-shvūt) and is living in Judea and Samaria.
Therefore, foreign citizens who are not Israeli citizens or Israeli residents are exempted from paying taxes such as Capital Gain Tax and/or Property Taxes (Mas Shevach and Mas Rechisha) when buying or selling an apartment in Judea and Samaria.
Furthermore, foreign citizens would also be exempted on Income Tax on rental income from apartments located in Judea and Samaria because Income Taxes apply only to