Romania property tax: what you pay there and in Israel

Is real estate investment in Romania the new alternative for investors? Just before you decide on a real estate investment, you must take into account the taxation in the country of investment and the additional tax payable in Israel.

Adv. Ilan Leibovitch | 15.03.2025 | Article updated in April 2026

First things first, let's put it on the table: residents of Israel are obliged to report to the Israeli tax authorities both the ownership of property abroad and any income from property abroad (even if, in practice, you did not physically transfer that income from abroad to Israel).

When an Israeli wants to invest in real estate overseas, it is advisable to examine the tax aspect as well before investing.

Here are the steps to check:

First step

Study the local tax laws of the country where you are buying the property.
Study and understand the Israeli tax system as it applies to real estate investment abroad.
Check whether there is a tax treaty between Israel and the country in which we intend to invest.

* The Israeli Real Estate Taxation Law does not apply to properties abroad (that is, buying real estate abroad does not affect the taxation of buying an apartment in Israel; the number of apartments an investor owns abroad has no bearing on the properties he rents out in Israel or on the betterment tax he must pay in Israel when selling an apartment in Israel).

Second step

You need to plan the nature of the investment, that is, whether you will buy a single property or several properties.

There is a fundamental difference between a private investment (an individual buying an apartment) and a company buying properties. Each case involves a different procedure and a different tax calculation.

If you invest in real estate overseas through a company, you must take the company's maintenance costs into account.

Taxation of real estate investments in Romania

When you buy real estate in Romania, the transaction is carried out before a notary, who is responsible for collecting the taxes from the parties and transferring them to the tax authorities, as well as for registering the transfer of rights in the local land registry.

As of the publication date of this article (March 2024), the tax on buying a property (new or resale) is between 1% and 3%, including the notary's fees.

When buying a first new apartment, the VAT is as follows:

VAT on buying an apartment in Romania is 21%. The transitional reduced rate of 9% (for apartments priced up to 600,000 lei) ended on 30 September 2026, so every new home is now subject to the full 21% VAT.

Illustrative photo: stock image

Residents of Israel must report to the Israeli tax authorities both the ownership of property abroad and any income from it.

The tax treaty between Israel and Romania

On rental income, a private individual investor pays 10% tax in Romania. The tax is calculated on net income after a flat 20% deduction from gross rent, so in practice it comes to about 8% of gross rent.

A company pays tax on rental income at a rate of 16% of the profit. A micro-company pays tax on rental income at a rate of 1% of turnover (to qualify, the company's revenue may not exceed €100,000 a year, it must employ at least one employee at the minimum wage, and rental income may not exceed 50% of the company's total revenue).

In addition, an Israeli investor is also liable for tax in Israel. Israel and Romania have a tax treaty under which a real estate investor does not pay double tax, so an Israeli who pays tax in Romania on rental income pays only the difference in Israel. Under the Income Tax Ordinance, the investor can choose between 2 tax tracks with respect to his tax liability in Israel:

Taxation of rental income in Israel under Section 121 of the Ordinance – at the applicable marginal tax rate, after deducting the expenses permitted by law (renovation, maintenance, etc.).
Taxation of rental income under Section 122A of the Ordinance – rent is taxed at a flat rate of 15%, with only depreciation deducted.

Let's take as an example a house rented out for €1,000 a month.

Annual rental income – €1,000 × 12 = €12,000

Tax payable in Romania at the 10% rate – €1,200.

After the flat 20% deduction, the tax actually paid is about 8% – €960

Tax payable in Israel if you choose to pay under Section 122A of the Ordinance –

€12,000 × 15% = €1,800, of which €960 was already paid in Romania. Therefore €840 is paid in Israel as the balance of the tax.

Paying tax when selling the property

When the property in Romania is sold, the following is payable:

In Romania – a private individual pays 3% of the sale price if the property was held for up to three years, and 1% if it was held for more than three years.

There is no exemption on sale: since 2023 the exemption for properties worth up to 450,000 lei no longer applies, and the tax is due on every transaction.

In Israel – the investor pays capital gains tax at the rate set by law on the difference between the purchase price and the sale price of the property.

Currently, he pays a total capital gains tax of 25% of the profit (this percentage includes any tax paid in Romania on that profit, to the extent it was paid).

For example:

A hypothetical example to illustrate the tax calculation only, not a price forecast: a house bought for €195,000 and sold after at least three years for €250,000.

Profit on the sale of the house – €55,000

Tax payable in Israel – €13,750.

The tax treatment of real estate investors' income from abroad changes frequently and requires specific attention to each individual case, according to the personal circumstances of each investor or company.

Frequently asked questions

What taxes do you pay when buying property in Romania?

The deal is signed before a notary, who collects the taxes and passes them to the authorities. According to the article, the tax on buying a new or resale property is between 1% and 3% including the notary's fees, and VAT of 21% applies to a new apartment.

How much tax is paid in Romania on rental income?

Under the current rules, a private individual pays 10% tax on net rental income after a flat 20% deduction, which is about 8% of gross rent. Check the current rules before you plan.

Do Israeli residents also pay tax in Israel on Romanian rent?

Yes. Israeli residents must report the property and its income, and thanks to the tax treaty they pay in Israel only the difference above the tax already paid in Romania. They can choose between the marginal rate (Section 121) and a flat 15% (Section 122A).

How much tax is due when you sell a property in Romania?

Under the current rules, Romania charges 3% if the property was held for less than three years and 1% if it was held longer. In Israel, capital gains tax is 25% of the profit, and that rate includes any tax paid in Romania on the same profit.

Does a Romanian property affect Israeli purchase tax or betterment tax?

No. The Israeli Real Estate Taxation Law does not apply to properties abroad, so buying in Romania does not change the purchase tax on an apartment in Israel or the betterment tax when you sell one.

The article was written in collaboration with Adv. Ilan Leibovitch of Leibovitch & Co., specialists in international real estate

The above does not constitute a recommendation and/or legal advice and/or accounting advice, and you should not rely on it but seek specific advice. The above may not be up to date and remains on the site only because of its general interest.

This article is general information, not legal, tax or financial advice. Consult local professionals before any transaction.

How much tax will I pay on a Romanian property, and in Israel?