The difference isn’t just a small gap; it’s a chasm. Israel’s purchase tax system, known as Mas Rechisha, is explicitly designed to favor residents buying a primary home while heavily taxing investors and foreign buyers. Understanding this distinction is fundamental to budgeting for your purchase.

For an Israeli resident buying their sole apartment (meaning they don’t own another property), the system is progressive and forgiving. There are tax brackets, or “steps” (madregot). As of late 2025, the first bracket is tax-free up to a certain amount (around 1.9 million shekels). This means a resident buying a modest first home might pay very little, or even zero, purchase tax. The rates then climb in steps: 3.5%, 5%, 8%, and 10% on higher portions of the price.

Now, let’s look at the situation for a non-resident or any person (including an Israeli) buying an additional property. The rules change completely. There is no tax-free amount. There are no gentle introductory steps. The tax starts at 8% from the very first shekel of the property’s value. For properties over a higher threshold (around 6 million shekels), the rate jumps to 10%.

Let’s use a simple example. On a 2 million shekel apartment:

  • A first-time Israeli resident might pay a tiny amount of tax, only on the portion above the tax-free step.

  • A non-resident would immediately pay 8% of the full 2 million, which is 160,000 shekels.

There is a major exception for new immigrants (Olim Chadashim). Within the first seven years after making Aliyah, they are entitled to a reduced purchase tax rate of 0.5% on the first portion of the price (up to around 1.9 million shekels) and 5% on the amount above that. This is a significant benefit designed to help new citizens put down roots.

This tax difference is one of the government’s primary tools for cooling the investment market. They are sending a clear message: the biggest benefits are reserved for those making Israel their primary home.

Too Long; Didn’t Read

  • The purchase tax (Mas Rechisha) system heavily favors Israeli residents buying their only home.

  • Residents (first home): Enjoy a large tax-free amount and progressive rates starting as low as 0%.

  • Non-residents & Investors: Pay a flat rate of 8% from the very first shekel, with no tax-free allowance.

  • New Immigrants (Olim): Receive a special, significantly reduced tax rate as a benefit for making Aliyah.

Let’s calculate exactly what your tax liability would be. No surprises. DM me at Semerenko Group.

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