Purchase Tax Discount on Residential Property for People with Disabilities (Right)

From All Rights (Kol-Zchut) (www.kolzchut.org.il)

הקדמה:

People with disabilities may be entitled to a reduced purchase tax of 0.5% of the value of the property, when purchasing a home in which they will live.
When purchasing a single residence, valued up to NIS 2,500,000 (as of 2017), there is a tax exemption on the first payment bracket.
You can use the Purchase Tax Simulator on the Tax Authority's website to calculate the amount of tax owed.
For more information, see Regulation 11 of the Property Tax Regulations (Improvement and Acquisitions) (Purchase Tax)

People with disabilities may be entitled, in accordance with the relevant conditions, to pay a reduced purchase tax when purchasing a home in which they will live.

  • Those who buy a piece of land to build on, are eligible to pay a reduced income tax of 0.5% on the part of the land that the house they will live in will be built on (regular income tax is paid on the rest of the property) and on the condition that the house is built within 2 years.
  • In some cases, as detailed below, applicants must appear before a National Insurance Institute Medical Committee in order to have benefit eligibility determined.

Benefit Rate

Benefit Rate in Purchase of a Single Home worth up to NIS 2,500,000

  • For the purchase of a single home worth up to NIS 2,500,000 made from 6.12.2016 and onward (see the definition below), there is a tax exemption on the first payment bracket:
  • On the part worth up to NIS 1,623,320, one will not pay purchase tax from 16.01.2017 until 15.01.2018 (up to NIS 1,600,175) in previous years.
  • On the remaining amount of the worth of the house (up to NIS 2,500,000), one must pay 0.5% of the value of that part.

Benefit Rates in the Remainder of Cases

  • When purchasing a home that is not defined as a single home, or is a single home worth over NIS 2,500,000, and for a purchase of a single home worth less than NIS 2,500,000 that was made before 6.12.2016, the benefit is to pay a reduced purchase tax of 0.5% on the value of the home.

Definition of a Single Home

  • A single home is defined as the only home of an Israel resident, including someone who became an Israeli resident or a returning resident within two years of purchasing the home.
  • The buyer of the home, his/her spouse that lives with him/her and his/her children (unmarried) up to age 18, are considered a single buyer for this purpose.
  • The home is considered a single home even if the buyer owns another home that was rented to people through a protected rental before 01.01.1997 or an additional home that the buyer owns less than a third off, and if it was a home that was inherited the buyer can own up to a half.

Home Improvements

  • If the purchases owns an additional home to the one he/she is currently buying, and sells the previous months within 18 months of purchasing the new home, or within a year of receiving the new home if it was bought from a contractor - than he/she is considered the owner of a single home in the context of tax calculations (when the additional apartment is sold it must be reported right away to the local offices).
  • The tax amounts for a single home will be used also in the purchase of an "alternate home" if the purchaser meets all of the following conditions:
    • He/she has 2 apartments simultaneously in his/her possession and he/she sold one of them with a tax exemption.
    • Within 12 months of selling the first home he/she sold the second home with a tax exemption in accordance with section 49 of the Property Tax Law (Purchase and Appreciation).
    • The combined value of both of the homes does not exceed NIS 1,998,000 (right as of 01.01.2017-31.12.2017).
    • In the year before or after the sale of the second home, he/she purchased a third home ("alternate home") for a cost of at least 3/4 of the combined value of the 2 previous homes.

Who is Eligible?

How to Claim It?

Medical Committee

  • In the following cases, an applicant must appear before a National Insurance Institute Medical Committee in order to have eligibility be determined:
    • Individuals for whom permanent disability of 100% has been established or 90% in accordance with a cumulative calculation of disabilities in various parts of the body.
    • Full (100%) Disabled Child Benefit recipients.
    • Individuals for whom permanent disability of at least 50% has been established who are also:
  • The request to appear before a medical committee is submitted to the Lands Taxes Office along with the request to receiving a purchase tax discount. For more information, see: Purchase Tax Discount Medical Committee.

Please Note

  • 'A person can receive a purchase tax discount only twice during the course of his life.
  • If a couple is buying a residence in order to live in it and one of the partners is entitled to the benefit, then they are both entitled to the discount. If the couple was not married when the residence was purchased, but they got married within 12 months of signing the purchase contract, they are entitled to a reimbursement of the value of 0.5% of what the eligible partner paid.

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