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Who Owes Under Israel’s New Multiple Property Tax?

Who Owes Under Israel’s New Multiple Property Tax?

israel property tax 2017

As part of the 2017-18 budget, the government introduced a new tax on the owners of multiple residential properties, which took effect on January 1, 2017.

The tax is levied on the value of the properties, irrespective of their use or rental status/income. It should also be noted that this tax is being administered by the Land Tax Authority, rather than the Income Tax authority.

We set out below the basic details of the rules in an FAQ format. Our FAQ below covers the basic details and is based on the law, as well as the guidance provided by the tax authorities.

Who is liable for the tax?

Anyone who owns 249% or more of properties. The percentage is calculated by adding the percentage owned of each separate property together.

What counts as a property?

Any property that has been built, located anywhere in Israel (for tax purposes), which is used for residential purposes, or was built for residential purposes.

What about split or joined properties?

In either case, provided this has been done legally, it is considered a single property.

What about family ownership?

Husband, wife & children aged 18 or younger are together considered a single taxpayer for this tax. An exemption exists where husband and wife are permanently separated, even if not formally divorced. Further, a property owned inside a company is taxed as the property of the shareholder.

What properties are excluded?

The law excludes a number of properties, depending on the circumstances. For example, properties used as inventory in a business, properties rented under the protected rent scheme, and inherited, unrented properties for the first year of inheritance, are all excluded.

How is the tax calculated?

The tax is based on the value of the property. On an annual basis, the tax is 1% of the value – but capped at NIS 18,000 per year. For partial ownership (be it in percentage terms, or due to purchases/sales), the proportional amount of tax is due.

It should be noted that two properties, at the request of the taxpayer, are excluded from the tax – such that a taxpayer owing 5 properties will be required to pay tax on only 3 of the properties.

How is the value calculated?

The value is based on a complicated formula, based on where the property is based, and its size. You can calculate the value here.

Are there exemptions for low-value properties?

There are certain exemptions or reductions if the total value of properties is below NIS 1,400,000. You can check your eligibility here.

What needs to be reported, and when?

Form 7201 needs to be filed by March 31, 2017,  detailing the properties owned, as well as their value for the purpose of the tax. This form can be filed via email.

Any changes, such as a sale or purchase, must be reported within 30 days of the change.

The tax authority will base assessments for subsequent years based on the original declarations (and amendment reports), so it’s important to ensure that your reports are up to date.

When does the tax need to be paid?

The tax, based on the original declaration, must be paid in two installments; the first by June 30 each year, and the second by December 31.

For increases in tax due to changes:

  • Changes made between January-May: June 30 of that year
  • Changes made between June-November: December 31 of that year
  • Changes made in December: June 30 of the following year

Are there any breaks available?

The tax authority has issued regulations granting various tax breaks on the sale of properties under certain circumstances. Applications need to be made on form 7202.


For people considering selling/transferring properties to reduce exposure to this tax, it needs to be remembered that there is Mas Shevach (Land Appreciation Tax) on the sale, and Mas Rechisha (Purchase Tax) on the purchase – and the effects should be considered before making any decisions.

For more information or assistance with property tax issues, contact us.

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