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.
Official Tax Authority check, June 4, 2026: for a qualifying single residential apartment, the current brackets are 0% up to NIS 1,978,745; 3.5% up to NIS 2,347,040; 5% up to NIS 6,055,070; 8% up to NIS 20,183,565; and 10% above that. These single-apartment brackets are listed for January 16, 2025 through January 15, 2028. Additional residential apartments are generally 8% up to NIS 6,055,070 and 10% above, under the investor temporary order through December 31, 2026. Always run the official Tax Authority purchase-tax simulator before signing.
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 2025-2026, the first bracket is tax-free up to about 1.98 million shekels (the brackets are frozen for 2025-2027). 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 the portion above a higher threshold (about 6 million shekels), the rate jumps to 10%.
Let’s use a simple example. On a 2 million shekel apartment:
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A first-time Israeli resident might pay a tiny amount of tax, only on the portion above the tax-free step.
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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). Under the current (2025-2026) rules, within the eligibility window around making Aliyah, an Oleh buying a single home to live in pays 0% on the first portion of the price (up to about 1,978,745 shekels), then a reduced 0.5% on the portion between that amount and 6,000,000 shekels; above 6,000,000 shekels the standard rates apply. These thresholds are frozen for 2025-2027 – confirm the exact current figures and eligibility with a tax adviser, as the Oleh rules were revised in recent years.
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
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The purchase tax (Mas Rechisha) system heavily favors Israeli residents buying their only home.
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Residents (first home): Enjoy a large tax-free amount and progressive rates starting as low as 0%.
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Non-residents & Investors: Pay a flat rate of 8% from the very first shekel, with no tax-free allowance.
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New Immigrants (Olim): Get a special reduced track – currently 0% up to ~1.98M shekels then 0.5% up to 6M shekels – confirm current figures with a tax adviser.
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