Real estate taxation
Purchase tax on a plot: why buyers pay 6% even when building a home
A buyer who purchases a plot to build a home is often surprised that the single-apartment brackets do not apply. Here is why, what the rate is, and how to get a refund of one sixth of the tax.
Why does a plot not get the single-apartment brackets?
The reduced brackets apply to a "residential apartment", including an apartment still under construction, but only where the seller has undertaken to complete the construction (section 9(c) of the Law). A plot has no building and no such undertaking, so the general rate of 6% applies (regulation 2(1) of the Purchase Tax Regulations).
The one-sixth refund: what are the conditions?
Under regulation 2(1a), one sixth of the tax is refunded when these conditions are met:
- A plan under the Planning and Building Law applies to the land and permits building at least one residential apartment.
- A permit to build at least one residential apartment was obtained no later than 24 months from the purchase.
- The tax paid was not allowed as a deduction under the Income Tax Ordinance.
The refund is not automatic. An application is filed together with the permit, so the permit timetable is worth planning at the purchase stage.
A worked example
A plot worth NIS 1,500,000:
- Purchase tax on the transaction: 6% = NIS 90,000.
- Refund if a permit is obtained within 24 months: one sixth = NIS 15,000.
- Net tax: NIS 75,000.
What about an apartment under construction, a purchase group or an existing house?
- A new-build apartment still under construction. The seller undertakes to complete construction, so it is a residential apartment, and the single or additional apartment brackets apply according to the buyer's position.
- Purchase group. The value is the value of the built apartment, and the residential brackets apply.
- An existing house on a plot. If a residential apartment stands on it, this is the purchase of an apartment, even if the plan is to demolish and rebuild.
What else is checked before buying a plot?
Registration in the Land Registry or with the Israel Land Authority, charges and notes, easements, debts to the local authority, and the registered building rights. Planning rights are checked with the local authority, with the help of an appraiser or architect. More: buying a plot.
Related articles and pages: Buying a plot | Purchase tax 2026: brackets and reliefs | Purchase tax calculator | Purchase groups
Sources
- Real Estate Taxation (Capital Gain and Purchase) Law, 5723-1963: section 9(c) (definition of "residential apartment"). Hebrew text on Wikisource.
- Real Estate Taxation (Capital Gain and Purchase) (Purchase Tax) Regulations, 5735-1974: regulation 2(1) (6% rate), regulation 2(1a) (one-sixth refund), regulation 11(d).
Checked on 11 November 2026.
Questions and answers
We bought a plot as a couple to build our only home. Is there no relief?
The single-apartment brackets do not apply to a plot. The relief is the one-sixth refund if the permit is obtained in time.
The permit was delayed beyond 24 months. What now?
Under the wording of the regulation, the refund depends on obtaining a permit by the end of 24 months from the purchase. It is worth checking the expected licensing timetable in advance.
Are there reliefs for people with disabilities or new immigrants buying a plot?
The regulations contain special arrangements, and in some of them the reduced rate applies only to the part of the land relating to the buyer's own home (regulation 11(d)). Each case is examined on its facts.
Not sure the deal is safe? Let's start with a conversation
In an initial conversation we will go over the property, the other party and the payment schedule, and tell you what needs to be checked before you sign.