One of the most important costs to understand before buying property in Israel is the Mas Rechisha — the property purchase tax. It can range from effectively zero for first-time Israeli resident buyers to over 10% for foreign investors. Understanding which bracket you fall into before signing any agreement is essential.
What is Mas Rechisha?
Mas Rechisha (מס רכישה) is a tax paid by the buyer at the time of purchasing real estate in Israel. It is paid to the Israel Tax Authority (Rashut HaMisim) and must be settled within 60 days of signing the purchase contract. The amount is calculated as a percentage of the property's purchase price.
Mas Rechisha Rates for Foreign Buyers (2026)
Non-residents purchasing property in Israel face the highest purchase tax rates. As of 2026, the rates are:
| Property Value Bracket | Tax Rate (non-resident) |
|---|---|
| Up to ₪5,872,725 | 8% |
| Above ₪5,872,725 | 10% |
For a ₪3,000,000 apartment purchased by a foreign buyer, the Mas Rechisha would be ₪240,000 (8%). This is a significant cost that must be factored into your budget from the outset.
Mas Rechisha for Israeli Residents (First Home)
Israeli residents purchasing their first (and only) residential property benefit from a graduated exemption structure:
| Property Value Bracket | Tax Rate (resident, first home) |
|---|---|
| Up to ₪1,978,745 | 0% |
| ₪1,978,745 – ₪2,347,495 | 3.5% |
| ₪2,347,495 – ₪6,055,070 | 5% |
| ₪6,055,070 – ₪20,183,570 | 8% |
| Above ₪20,183,570 | 10% |
The Oleh Chadash Discount
New immigrants (olim chadashim) who purchase a property benefit from a special reduced rate, regardless of whether they already own property in Israel:
| Property Value Bracket | Tax Rate (oleh) |
|---|---|
| Up to ₪1,978,745 | 0.5% |
| Above ₪1,978,745 | 5% |
Key rule: The oleh discount applies once per household and must be used within 7 years of your Aliyah date. It applies to both residential and commercial properties. For a ₪3,000,000 apartment, an oleh would pay approximately ₪59,000 vs. ₪240,000 for a foreign buyer — a saving of ₪181,000.
Other Taxes and Costs to Know
VAT (Mas Erech Musaf): When buying from a developer (new construction), VAT of 17% is included in the listed price. There is no additional VAT for resale (yad shnia) purchases.
Attorney fees: Typically 0.5–1% of the purchase price for each party's attorney.
Real estate agent fee: In Israel, the standard agency commission is 2% + VAT from each party (buyer and seller).
Tabu registration fee: A nominal fee paid to the land registry to register the transfer of ownership.
How to Minimize Your Tax Bill
The single most important step is timing your purchase correctly relative to your Aliyah date. Making Aliyah before signing the purchase contract secures the oleh rate. Consulting an Israeli tax attorney before signing anything is strongly recommended — the rules are updated regularly and professional advice pays for itself many times over.
Frequently Asked Questions
When must Mas Rechisha be paid?
Mas Rechisha must be paid within 60 days of signing the purchase agreement. Your attorney will file the declaration with the Israel Tax Authority and arrange payment.
Does the oleh discount apply to investment properties?
Yes. The oleh Mas Rechisha discount applies to both residential and commercial properties. However, it can only be used once per household over the lifetime of the oleh status.
What happens if I buy before making Aliyah?
You will pay the foreign buyer rate (8–10%). You cannot retroactively claim the oleh discount on a purchase made before your Aliyah date. Timing is critical.
Are there other purchase taxes in Israel?
Mas Rechisha is the primary purchase tax. There is no stamp duty as in some countries. VAT applies when buying new construction from a developer but is included in the listed price.