Buying property in Israel as a foreign resident costs roughly 10% to 13% of the purchase price on top of the price itself, and on higher-value or complex transactions it reaches 13% to 16%. Purchase tax is the largest single component and it cannot be financed.
Most buyers budget for the deposit and treat everything else as rounding. It is not rounding. On a NIS 3,000,000 apartment it is somewhere between NIS 300,000 and NIS 390,000 in cash that has to exist on top of the mortgage.
This is the line-by-line breakdown. Written by a licensed Israeli real estate broker and mortgage advisor (License #3205629) who has handled 444+ transactions for buyers living abroad.
The full list
Worked on a NIS 3,000,000 resale apartment bought by a foreign resident.
| Item | Rate | On NIS 3,000,000 |
|---|---|---|
| Purchase tax (mas rechisha) | 8% from the first shekel | NIS 240,000 |
| Legal fees | 0.5% to 1.5% plus 18% VAT | NIS 17,700 to 53,100 |
| Agent commission | 2% plus 18% VAT | NIS 70,800 |
| Bank appraisal (shamai) | Fixed, plus VAT | NIS 2,500 to 5,000 |
| Mortgage arrangement fees | Varies by bank | NIS 1,500 to 4,000 |
| Tabu extracts and registration | Per document | NIS 75 to 150 each |
| Translations and notary | Per document | NIS 2,000 to 6,000 |
| Total | NIS 335,000 to 379,000 |
That is 11% to 12.6% of the price, which lands exactly where the market range predicts.
Purchase tax, the one that dominates everything
At NIS 240,000 on this example, purchase tax is between two thirds and three quarters of your total acquisition costs. Every other line is a rounding error beside it.
A foreign resident is taxed on the additional-residence table: 8% from the first shekel up to NIS 6,055,070, and 10% above. There is no exemption band, even if this is the only property you own anywhere.
Two things worth knowing before you budget. The brackets are frozen until 15 January 2028, so the thresholds will not drift upward with inflation. And if you become an Israeli resident within two years of the purchase date, you can be reassessed on the resident brackets and reclaim most of it. The full purchase tax position is covered separately here.
VAT at 18%, and where it actually applies
This trips up buyers from countries where property transactions are VAT-free.
VAT at 18% is charged on the services: the lawyer’s fee, the agent’s commission, the bank appraisal. It is not charged on the purchase price of a second-hand apartment sold between two private individuals.
New-build purchases from a developer are different, because the developer is a business and the price is quoted with VAT included. Check which you are being quoted.
The practical effect: an agent commission quoted as “2%” is actually 2.36% of the price once VAT is added. On NIS 3,000,000 that is the difference between NIS 60,000 and NIS 70,800.
Agent commission, and the thing foreign buyers get wrong
Most Israeli transactions involve two agents, one for each side, and each party pays their own agent. Buyers arriving from markets where the seller pays the entire commission are often surprised by this at the worst possible moment.
Budget 2% plus VAT as the buyer, and confirm in writing before viewing anything that the arrangement is what you think it is.
Legal fees, and why the range is so wide
The 0.5% to 1.5% spread is real and it reflects genuine differences in work. A straightforward resale between two private parties with clean title sits at the bottom. A purchase involving a foreign buyer, power of attorney, currency transfers, unregistered rights or an estate sits at the top, and should.
Do not shop this line on price alone. Legal fees are around 1% of the transaction and the risk they cover is 100% of it.
On new-build purchases there is an additional item: the developer may charge you for its own lawyer to register your rights, capped in 2026 at the lower of 0.5% of the price or NIS 5,915 plus VAT.
What this does to your financing
Here is the calculation that decides whether a purchase is actually viable.
As a non-resident you are capped at 50% loan-to-value. On NIS 3,000,000 that is a NIS 1,500,000 mortgage and NIS 1,500,000 of your own equity. Then add roughly NIS 350,000 of acquisition costs, none of which can be financed.
Total cash required: about NIS 1,850,000, which is 61.7% of the purchase price.
Not 50%. Buyers who plan against the LTV figure alone are short by roughly a fifth of what they actually need, and they discover it in the final weeks when there is no time to solve it. In my experience this is a far more common cause of failed transactions than anything to do with mortgage approval itself.
The ongoing costs nobody quotes you
Separate from acquisition, and worth knowing before you commit:
- Arnona, municipal tax, billed by the city and varying substantially between municipalities
- Vaad bayit, the building committee fee, covering shared maintenance, cleaning, lifts and gardens
- Building insurance, which the bank will require for as long as the mortgage exists
- Property management, if the apartment is let while you are abroad
A typical apartment runs somewhere in the region of NIS 15,000 to 30,000 a year across these, which matters a great deal if you are modelling rental yield rather than buying a home.
Frequently asked questions
How much are closing costs when buying property in Israel?
For a foreign buyer, roughly 10% to 13% of the purchase price in a standard transaction, rising to 13% to 16% on higher-value or complex deals. Purchase tax is the largest component by a wide margin.
Is VAT charged on buying an apartment in Israel?
Not on the sale price of a second-hand apartment between private individuals. VAT at 18% applies to the services: legal fees, agent commission and the bank appraisal. New builds bought from a developer are quoted with VAT included in the price.
Who pays the real estate agent in Israel?
Each side pays their own agent, typically 2% plus 18% VAT. This differs from markets where the seller covers the full commission, and it catches foreign buyers out regularly.
Can purchase tax or closing costs be added to the mortgage?
No. They are paid from your own funds. Combined with the 50% loan-to-value cap on non-residents, the realistic cash requirement is close to 61% of the purchase price rather than 50%.
How much cash do I need to buy a NIS 3 million apartment in Israel as a foreigner?
About NIS 1,850,000. That is NIS 1,500,000 of equity against the 50% mortgage cap, plus roughly NIS 350,000 in purchase tax, legal fees, commission and related costs.
Next steps
Work the cost question and the financing question together, because the same pool of cash serves both. Start with what an Israeli bank will approve for your profile, then the purchase tax position, and check the numbers against what different communities actually cost before narrowing your search.
Figures are market ranges current as of August 2026 and vary by transaction, professional and municipality. They are a budgeting frame, not a quotation. Confirm your own position with a qualified Israeli attorney and tax professional before signing.