Does one still pay property taxes on this land?
The craziest part (almost) no one knows👇
In Israel, most people don’t actually own the land their home sits on. Around 93% of the land is owned by the state and managed by the Israel Land Authority (ILA). When you “buy” a home, you’re typically leasing the land from the Israel Land Authority (ILA)—usually under long-term leases of 49 or 98 years. That means the state retains significant control over what happens to the land, including redevelopment plans, rezoning, or repossession under certain conditions.
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Discussion
There you go, enjoy:
🏠 When Buying Property
1. Purchase Tax (Mas Rechisha)
Paid by the buyer to the state.
• First home: Reduced rates; partial or full exemption up to ~₪1.9 million.
• Second home or investment: 8%+ on full amount.
• Land purchase: Usually 6%.
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🏘️ When Selling Property
2. Capital Gains Tax (Mas Shevach)
Paid by the seller on the profit from the sale (difference between purchase and sale price).
• Exemptions may apply for a single residential apartment held for 18+ months.
• Standard tax: 25% on real gains (after indexation and deductions).
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📅 Ongoing/Annual Taxes
3. Property Tax (Arnona)
Paid to the local municipality.
• Based on size (m²), location, and property use.
• Varies between cities.
4. Betterment Levy (Hetel Hashbacha)
Paid when property value increases due to a zoning change or added building rights.
• Usually 50% of the increased value.
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🧱 Land (Vacant Plots)
• Purchase Tax: 6%
• Capital Gains Tax: 25% on sale profits
• Betterment Levy: On zoning upgrades
• Annual Lease Fees: If land is owned by Israel Land Authority (ILA/RMI)
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Example:
You buy land from the state for ₪1.5M:
• Pay ₪90,000 purchase tax
• Pay one-time lease fee to the ILA
• Pay low arnona (for vacant land)
• Later, if zoning changes or you sell, you may owe betterment levy or capital gains tax
Thank you 🙏🏻