If you are buying property in Israel as a foreign resident, you pay purchase tax (mas rechisha) of 8% from the very first shekel, up to NIS 6,055,070, and 10% on everything above it. There is no tax-free threshold for you, even if this is the only property you own anywhere in the world.
That single sentence is the answer most overseas buyers are looking for. The rest of this guide explains where that money actually goes, the three-year bracket freeze that is quietly raising your real tax bill, and the two-year rule that can hand a large part of it back.
Written by a licensed Israeli real estate and mortgage advisor (License #3205629) who has guided 444+ transactions for buyers from the US, UK, France, Canada, Australia, and South Africa.
Purchase tax rates for foreign buyers in 2026
Israel taxes residential property by bracket, and which bracket table applies to you depends entirely on your residency status, not on how many properties you own abroad.
A foreign resident is taxed on the additional residence table. The law assumes you already have a home in your country of residence, so the single-residence relief is closed to you.
| Property value | Rate for a foreign resident |
|---|---|
| Up to NIS 6,055,070 | 8% |
| Above NIS 6,055,070 | 10% |
Compare that with what an Israeli resident buying their only home pays:
| Property value | Rate for an Israeli resident, single home |
|---|---|
| Up to NIS 1,978,745 | 0% |
| NIS 1,978,745 to 2,347,040 | 3.5% |
| NIS 2,347,040 to 6,055,070 | 5% |
| NIS 6,055,070 to 20,183,565 | 8% |
| Above NIS 20,183,565 | 10% |
The gap is not marginal. On a NIS 3,000,000 apartment, an Israeli buying their first home pays roughly NIS 45,600. A foreign resident pays NIS 240,000 on the identical apartment. The same property, the same price, a difference of nearly NIS 195,000, decided entirely by residency status.
The bracket freeze almost nobody explains
Here is the part that rarely makes it into English-language guides.
Israeli purchase-tax brackets used to be indexed annually to the Consumer Price Index, so the thresholds crept upward with inflation. Under the Economic Efficiency Law accompanying the 2025 state budget, that indexation is suspended from 16 January 2025 through 15 January 2028.
For three years the thresholds do not move. Property prices, however, do.
The effect is a tax increase that never required anyone to raise a rate. As prices rise against frozen thresholds, more of every purchase falls into higher brackets, and the exemption at the bottom covers a steadily smaller share of a real apartment. Buyers feel it as “the tax went up.” Formally, nothing changed.
For a foreign buyer the freeze bites in one specific place: the NIS 6,055,070 line where 8% becomes 10%. That line is fixed until 2028 while the market climbs toward it.
Three worked examples
All three assume a foreign resident buyer with no Israeli residency status.
A NIS 2,200,000 apartment in Netanya
Entirely inside the first bracket: 2,200,000 x 8% = NIS 176,000. An Israeli first-home buyer would pay about NIS 7,700 on the same purchase.
A NIS 4,500,000 apartment in Jerusalem
Still inside the first bracket: 4,500,000 x 8% = NIS 360,000.
A NIS 8,000,000 property in Herzliya Pituach
Split across both brackets. The first NIS 6,055,070 at 8% is NIS 484,406. The remaining NIS 1,944,930 at 10% is NIS 194,493. Total: NIS 678,899.
Budget purchase tax as real, non-recoverable acquisition cost alongside legal fees, agent commission, appraisal, and registration. It is not a closing-day surprise you can negotiate.
The two-year rule that can refund most of it
This is the most valuable provision in Israeli purchase-tax law for overseas buyers, and the one most often discovered too late.
Single-residence brackets apply to an Israeli resident, and the law extends that definition to a buyer who becomes an Israeli resident for the first time, or a veteran returning resident, within two years of the purchase date.
Buy while still a foreign resident, complete your Aliyah inside that window, and you can be reassessed on the single-residence table and reclaimed the difference retroactively.
On a NIS 3,000,000 apartment that is a refund in the region of NIS 190,000.
Two cautions. The clock runs from the purchase date, not from when you start thinking about Aliyah. And extension provisions exist in certain circumstances, so the deadline is not always a flat 24 months. If Aliyah is anywhere in your plans, the sequencing of your purchase is a decision worth taking advice on before you sign, not after.
If you are already an oleh
New immigrants have their own bracket table, separate from both of the above:
| Property value | Oleh rate |
|---|---|
| Up to NIS 1,988,090 | 0.5% |
| Above NIS 1,988,090 | 5% |
The eligibility window runs from one year before entry to Israel to seven years after. The benefit can be used once in a lifetime, which makes the choice of which property to use it on a genuine planning decision rather than a formality.
Note the threshold: NIS 1,988,090, not the NIS 1,978,745 that applies to the single-residence table. The two figures are close enough to be mistaken for each other and are indexed separately.
One more point worth knowing: the oleh track is not automatically the cheaper one. Above roughly NIS 2 million the 5% oleh rate competes with the 5% single-residence bracket, and depending on the purchase price the single-residence table can produce a lower bill. Run both before you elect.
The tax benefit is also only half of what changes on Aliyah. An oleh holding Israeli residency is assessed as an Israeli resident for financing too, which raises the mortgage ceiling from 50% to up to 75% loan-to-value on a sole dwelling. Lower tax and a larger mortgage arrive together, which is why the timing of a purchase around Aliyah is worth planning rather than leaving to chance.
What this means for how you finance the purchase
Purchase tax is paid from your own equity. It cannot be financed by the mortgage.
That matters more for foreign buyers than for anyone else, because non-residents are capped at 50% LTV by Bank of Israel policy. On a NIS 3,000,000 apartment you are already bringing NIS 1,500,000 of your own money, and the NIS 240,000 purchase tax sits on top of that, not inside it.
The practical planning number for a foreign buyer is therefore closer to 58 to 60% of the purchase price in cash, once tax, legal fees, agent commission, and appraisal are counted. Buyers who budget only for the 50% down payment are the ones who run short at signing.
The 50% cap itself is regulation rather than bank policy, which is why shopping between lenders will not raise it. What banks do differ on is whether they will approve your profile at all, at what rate, and how quickly.
“The purchase tax figure itself is rarely what derails a deal. What derails deals is discovering it in the wrong week. I have seen buyers commit to a price, then find out the tax and closing costs push them past their available equity, and then try to solve it with a mortgage that regulation will not allow. Run the tax number before you make an offer, not after.”
Or Shlomo, Real Estate and Mortgage Advisor, License #3205629
Frequently asked questions
Do foreign buyers really get no tax-free threshold in Israel?
Correct. A foreign resident is taxed on the additional-residence table, which starts at 8% from the first shekel. The 0% band up to NIS 1,978,745 applies only to Israeli residents buying a single home.
What are the 2026 purchase tax rates for a foreign buyer?
8% on value up to NIS 6,055,070 and 10% on any value above that threshold. These brackets are frozen until 15 January 2028.
Can I get the purchase tax back if I make Aliyah after buying?
Potentially yes. If you become an Israeli resident for the first time, or a veteran returning resident, within two years of the purchase date, you can be assessed on the single-residence brackets and reclaim the difference. On a NIS 3,000,000 apartment that is roughly NIS 190,000.
Is the oleh purchase tax benefit always better than the standard rates?
No. The oleh track is 0.5% up to NIS 1,988,090 and 5% above it, and it can be used only once in a lifetime. Above roughly NIS 2 million it can produce a similar or higher bill than the single-residence table. Both should be calculated before electing.
Can purchase tax be included in my Israeli mortgage?
No. Purchase tax is paid from your own funds. Combined with the 50% LTV cap on non-residents, plan for roughly 58 to 60% of the purchase price in cash once all acquisition costs are included.
Next steps
Purchase tax is one line in a larger acquisition budget, and it interacts directly with how much financing you can raise. If you are working out whether a purchase is viable, start with the two pieces that constrain everything else: what an Israeli bank will actually lend you as a non-resident, and the full step-by-step purchase process from offer to Tabu registration.
For buyers weighing a purchase as an investment rather than a home, the tax treatment on the way out matters as much as on the way in. That is covered under property investment for overseas buyers.
This article explains general rules current as of August 2026 and is not a substitute for personal tax advice. Purchase tax outcomes depend on your individual residency status, prior property holdings, and timing. Confirm your position with a qualified Israeli tax professional or attorney before signing.