The fast version: if you are a private person selling your own second-hand apartment in Israel, you almost never charge VAT on the sale price. VAT in Israel is 18% (raised on 1 January 2025), and a private residential resale sits outside the VAT system entirely. VAT does still touch your costs: your lawyer adds 18% VAT to their fee, and your agent adds 18% VAT to the commission (about 2% plus VAT, roughly 2.36% all in). VAT turns into a real risk on the sale price only when you stop looking like a private homeowner and start looking like a business: a company that owns the property, a registered dealer (osek murshe), a developer selling new units, or a private person who sells land or commercial space, or who trades property often enough to count as business activity. The safe rule is simple. Never assume your VAT status. Have a lawyer confirm it in writing before you sign, because if VAT applies and you priced as if it did not, the tax comes straight out of your pocket.
You want one clear answer: do I add 18% VAT to what the buyer pays, or not? For most sellers the answer is no, but the exceptions are exactly the ones that cost the most if you get them wrong. This page walks the decision by who you are.
Does VAT apply to your sale? Work it by seller type
VAT follows the seller, not the building. The same apartment can be sold VAT-free by one person and VAT-able by another. Run yourself down this fork before you set a price.
| Who is selling | What is being sold | VAT on the sale price? |
|---|---|---|
| Private individual, Israeli resident or foreign | Second-hand residential apartment they owned and lived in or rented privately | No, generally outside VAT |
| Private individual | A plot of land or a commercial unit (shop, office) | Maybe, can trigger VAT |
| Registered dealer (osek murshe) or company | Property held as a business asset | Yes, generally 18% |
| Developer (kablan) | New apartments or units they built to sell | Yes, 18% (usually shown in the price) |
The single most important line in that table is the first one, so here is why it works that way.
Why a private apartment resale is normally VAT-free
A private person selling their own second-hand apartment is not a “dealer” in the eyes of the VAT Law, so the sale falls outside VAT. VAT is a tax on business transactions run by registered dealers. When you sell the home you owned as a private individual, you are not acting as a business, you are disposing of a personal asset. That is why the price you negotiate with the buyer is the price, with no 18% added on top.
This is the cleanest part of the whole system, and it covers the large majority of resales handled in the Selling Property in Israel hub. It does not mean your sale is tax-free overall. You may still owe capital gains tax (mas shevach) on your real gain, and a betterment levy if a planning change raised your value. VAT is simply a separate question, and for a private apartment the VAT answer is usually “none on the sale price.”
Foreign residents get the same VAT treatment here. A non-resident selling a second-hand apartment they held privately is also outside VAT on the sale, even though their capital gains position differs. See selling as a foreign resident for the gains side.
VAT you do pay: on your lawyer and agent, not on the sale
Even a fully VAT-free apartment sale carries 18% VAT on the services you buy to close it. This is the VAT most sellers actually feel.
- Lawyer fee. A seller’s lawyer charges roughly 0.5% to 1.5% of the price, plus 18% VAT on that fee. The lawyer drafts and negotiates the contract and handles registration. More on what they do in the contract and your lawyer.
- Agent commission. The customary residential commission is about 2% of the sale price, plus 18% VAT, so the real cost is about 2.36%. Each side pays its own agent. The full breakdown is in standard agent fees.
My worked example (my own estimate, based on the fact-bank figures of about 2% commission plus 18% VAT and a 0.5% to 1.5% lawyer fee plus 18% VAT). Take a NIS 3,000,000 apartment.
- Agent: 2% = NIS 60,000, plus 18% VAT (NIS 10,800) = NIS 70,800.
- Lawyer at 1%: NIS 30,000, plus 18% VAT (NIS 5,400) = NIS 35,400.
- VAT alone inside those two bills: NIS 10,800 + NIS 5,400 = NIS 16,200.
So on a typical VAT-free apartment sale, the VAT you still pay is about NIS 16,200, or roughly 0.54% of the sale price (NIS 16,200 divided by NIS 3,000,000). That is a useful number to budget. There is good news attached: the agent commission and the lawyer fee are both deductible against your mas shevach gain, and the VAT you paid is part of the expense you deduct. Keep every receipt and tax invoice, because no invoice means no deduction.
When the sale price itself carries 18% VAT
VAT lands on the sale price when the seller is treated as a business. Four situations flip you from “no VAT” to “18% VAT,” and they are worth knowing even if you think none apply.
Commercial property
Selling a shop, office, warehouse or other commercial unit is generally a VAT-able transaction at 18% when the seller is a registered dealer. Commercial real estate is usually owned as a business asset, and a registered dealer who claimed VAT credits or expensed the property on the way in will charge VAT on the way out. A private person selling a commercial unit can also fall into VAT depending on how the property was used and held. This is a different world from a home sale, and it has its own page: selling commercial property in Israel.
Company seller
If a company owns the property, the sale is a business transaction. The company will generally charge 18% VAT where the property was a business asset, and separately the company’s gain is taxed at the corporate rate (currently 23%) rather than the individual 25% mas shevach. Watch the depreciation trap: a company that depreciated the building (typically about 2% a year, land does not depreciate) has a lower cost basis, which raises the taxable gain on sale. The VAT question and the corporate-tax question are separate, and both apply.
Developer sale
A developer (kablan) selling new apartments charges 18% VAT, and it is normally already built into the headline price buyers see. A developer is the textbook registered dealer: they build to sell, so every unit is a business sale that bears VAT. If you are reselling a brand-new unit you bought from a developer before completion, your resale is usually an assignment of rights and its own VAT analysis applies, covered in selling new development before completion.
Land and plots
Selling land carries real VAT risk even for a private person. A private individual selling a second-hand apartment is outside VAT, but selling a plot of land can trigger VAT, especially where the land is held or sold in a business-like way or sold to a developer. Where the buyer is a registered dealer (osek murshe), the VAT liability can shift to the buyer under a self-invoice or reverse-charge mechanism, so the buyer accounts for the VAT rather than you. That is a meaningful structuring point, and it must be confirmed before you price. The land-specific path is in selling land or a plot.
The trap: “business activity” can turn a private seller into a dealer
VAT can attach to a private person who is selling property often enough, or in a commercial enough way, to count as carrying on a business. The VAT Law does not only look at your job title. It looks at what you are actually doing. Someone who buys, improves and flips several properties, runs a property operation, or sells land as part of a venture can be characterized as conducting business activity, and then VAT enters the picture on a sale that the seller assumed was a clean private deal.
There is no simple “you are safe under X sales a year” line in the fact base, which is exactly the danger: the test is about the character of your activity, not a tidy number. If your sale looks routine and personal (the home you lived in, sold once), you are almost certainly fine. If it is one of a pattern, or it is land or commercial space, get the VAT status pinned down. The same instinct that protects you from tax mistakes sellers make protects you here.
Why you should never assume your VAT status
Assuming you are VAT-free and being wrong is one of the most expensive seller errors, because VAT is 18% of the price, not a small fee. If you sign a contract for NIS 3,000,000 believing no VAT applies, and the deal turns out to be VAT-able, you can be left owing about NIS 457,627 of VAT out of that figure (because a VAT-inclusive NIS 3,000,000 is NIS 2,542,373 of value plus NIS 457,627 of VAT at 18%). That is my estimate, computed by dividing the gross by 1.18 and taking the difference, and it shows the scale: a wrong assumption does not cost you a percent or two, it can cost a six-figure shekel sum.
Three reasons this catches people out:
- The line is about you, not the property. Two people can sell identical units with opposite VAT outcomes. You cannot copy a neighbor’s answer.
- Land and commercial deals look “private” but are not always. A plot sold by an individual feels personal, yet it can carry VAT.
- Whose VAT it is can change the price. If a dealer-buyer self-invoices, the cash flow and the contract wording differ. This has to be agreed in writing, not left to chance.
Your before-you-sign VAT checklist
- Tell your lawyer plainly how you hold the property: as a private individual, through a company, or as a registered dealer.
- Confirm in writing whether the sale price is VAT-free, VAT-inclusive, or VAT-on-top. Do not leave it implied.
- If it is land or commercial, ask specifically whether VAT applies and who accounts for it (you, or a dealer-buyer by self-invoice).
- If you have sold several properties recently, raise the business-activity question before you price.
- Keep tax invoices for the agent and lawyer fees, so you can deduct them (and their VAT) against mas shevach.
- Make sure the contract states clearly whether quoted figures include or exclude VAT, so there is no fight at closing.
VAT sits inside the wider tax and cost picture for sellers. See how it fits alongside the others in Taxes and Costs of Selling, and see what you actually walk away with in what sellers keep as net proceeds.
If you are not sure which side of the line your sale falls on, get it confirmed before you commit to a price. Tell us about your sale and we will help you pin down your VAT status before you sign.
