Purchase Tax on Agricultural Land 2026

Purchasing land — whether a plot for future construction or agricultural land — is subject to completely different tax rules than purchasing a residential apartment. Here’s what you need to know before signing.

Unlike residential apartments, where the brackets depend on the value of the property and the status of "single apartment", purchasing land (not directly designated for residential use) is subject to a uniform tax rate, regardless of the number of properties you already own.

The Uniform Rate — 6%

Purchasing land, commercial properties, and plots not classified as residential apartments is subject to a uniform tax rate of 6% of the property's value — without brackets, exemptions, or dependence on the status of "single apartment". This is significantly different from the purchase tax brackets for residential apartments, which include exemptions at the bottom of the scale.

Calculation Example

For a plot valued at 800,000 ₪, the purchase tax will be 48,000 ₪ (6%) — regardless of whether this is your first purchase or if you already own other properties.

Agricultural Land — Usage Restrictions to Be Aware Of

Land classified as agricultural cannot be built on for residential purposes unless there is an approved plan for re-designation. Purchasing agricultural land with the future intention of building a residential house involves significant planning risk — there is no guarantee that the plan will be approved, and the timelines for re-designation can take years.

What Happens If the Land Changes Designation After Purchase?

Future re-designation (from agricultural to residential) does not change the purchase tax paid in the past — but it may trigger a betterment levy obligation (see the dedicated guide), as the change in designation significantly increases the value of the land.

Difference Between Private Purchase and Purchase from a Developer/Business

If you are purchasing land from a developer or a licensed business (not from a private individual), VAT (17%) may also apply in addition to the purchase tax — a different situation from purchasing a second-hand residential apartment from a private individual, where there is no VAT at all.

Plot Allocated by the Israel Land Authority

Plots allocated in tenders by the Israel Land Authority (common in the Gush Adumim settlements and the Jordan Valley) often also involve separate development fees or lease fees, in addition to the regular purchase tax — it is advisable to check the full payment structure before submitting a bid in the tender.

A Common Mistake to Avoid

A common mistake is to purchase agricultural land with the expectation of a quick re-designation, without checking the actual planning status with the local committee — re-designation processes can take many years and may not materialize at all, making the land less liquid than you expected.

Taxation When Selling the Land in the Future

When selling land (agricultural or a plot), capital gains tax applies to the profit, but there is no eligibility for the "residential apartment" exemption that exists for apartments — all profit (minus recognized expenses) is subject to tax, usually at a rate of 25%, with no possibility for full exemption as exists for a single residential apartment.

Frequently Asked Questions

Is there an exemption from purchase tax on land for active farmers?
In certain cases, yes, depending on specific conditions set by law — eligibility should be checked with an attorney specializing in agricultural real estate taxation.

Is the purchase tax on a plot for self-construction the same as for an investment plot?
Yes — the uniform rate of 6% applies regardless of the intended future use of the land.

What is the difference in taxation between a ready-to-build plot and raw land without infrastructure?
The purchase tax is the same (6%), but the value of the land itself (and therefore the actual tax amount) differs significantly depending on the level of development.

Considering Buying or Selling a Property?

View properties for sale in Ma'ale Adumim and Jerusalem, and contact the Merkaz HaNekasim team for personal advice.