Israel Purchase Tax Freeze 2026–2027: How It Really Reshapes The Cost Of Buying A Home

Israel quietly locked in its purchase tax brackets for years while property prices keep climbing. On paper, nothing moves. In shekels, everything changes. If you are buying in 2025–2027, this freeze can either punish you or protect you, depending on who you are and how you plan.

Quick Take

• Israel has frozen all inflation updates to purchase tax brackets for 2025–2027, including Mas Rechisha on homes and capital gains thresholds on sales. (Government of Israel)
• First home buyers still enjoy progressive relief, but the real value of that relief shrinks as prices rise.
• Investors, second-home buyers, and most foreign residents stay in the 8 percent and 10 percent high-rate regime on investment apartments. (Government of Israel)
• Olim (new immigrants) and some returning residents see their special brackets become relatively more valuable as long as prices outpace inflation indexing. (Government of Israel)
• The freeze effectively shifts more of the tax burden onto people who keep buying, while leaving nominal brackets untouched on paper.

What exactly did Israel freeze in its purchase tax system from 2025 to 2027?

Israel froze the automatic index-linking of many tax thresholds for 2025–2027, including purchase tax brackets and several real estate exemption ceilings. In practice that means the Mas Rechisha thresholds that were updated in January 2024 stay fixed in nominal shekels through at least 2027, even if prices rise. (Government of Israel)

Usually, these amounts are adjusted annually according to the consumer price index or housing price indices. For real estate, that includes:

• Purchase tax brackets for a single residential apartment.
• Purchase tax brackets for additional apartments.
• Exemption ceilings for capital gains on the sale of a single apartment and related real estate thresholds. (Government of Israel)

The official reasoning is budgetary: in wartime and recovery, Israel needs more revenue without formally raising headline rates. Freezing indexation quietly pushes more taxpayers into higher effective tax, the same way a salary freeze plus inflation erodes real income.

For real estate buyers, the twist is sharper. Housing prices tend to grow faster than the CPI over time. When brackets stand still while apartment prices move, more of every transaction slides into higher tax bands even though the law text barely changes.

How do the frozen brackets work for a first or only home in Israel?

For an Israeli resident buying a first or only home, purchase tax is progressive: low or zero tax on the first slice of value, rising band by band as the price increases. The 2024 update set five bands for a single residential apartment, starting with a full exemption on a modest portion and climbing stepwise up to a top marginal rate of 10 percent on very high-value properties. (Government of Israel)

Because the freeze stops all indexation, those same nominal thresholds are planned to apply to purchases through 15 January 2028. (Kol Zchut)

Think about what that means in simple numbers. Imagine:

• The exemption band is roughly 2 million shekels.
• The next bands charge 3.5, then 5, then 8, then 10 percent on each slice of value above that.

Now suppose you buy a 2.5 million shekel apartment in 2025:

• Roughly the first 2 million shekels fall into the 0 percent band.
• The next slice is taxed at 3.5 percent.
• Whatever sits above that falls into the 5 percent band.

If apartment prices rise 4 percent per year, that same unit could easily cost about 2.7 million shekels in 2027. With frozen thresholds, a larger portion of the price is now in the 5 percent band instead of 3.5 percent. You did not become richer in real terms, but the system treats you as if you did.

Without the freeze, the brackets would have crept upward with inflation or housing prices, keeping the discounted bands aligned with a typical starter apartment. With the freeze, buying later means paying more Mas Rechisha on the same real apartment.

What is happening to investors, second homes, and foreign buyers under the freeze?

Israel treats additional apartments much more harshly than a single residence. For anyone buying a home beyond their first (and for most foreign residents), the purchase tax regime is essentially a two-step cliff: around 8 percent on the main body of the price and 10 percent above a high threshold. (Government of Israel)

The freeze cuts differently here. For additional apartments:

• The rates themselves are already high and are not changing.
• The key lever is the threshold where you jump from 8 to 10 percent.
• Because that threshold is frozen in shekels, more and more of typical deals will fall into the 10 percent band as prices climb.

Picture an investor buying a 4 million shekel apartment in 2025:

• Almost the entire price sits in the 8 percent band.
• Purchase tax is roughly 320,000 shekels (8 percent of 4 million), ignoring the upper band for simplicity.

Now imagine that by 2027, similar units cost 4.6 million, but the 8/10 threshold has not moved.

• A chunk of the price now spills into the 10 percent band.
• The bill may jump from about 320,000 to roughly 360,000 shekels or more, purely because prices rose while the threshold stayed flat.

For non-residents this is even starker. They often cannot access the first-home relief or the most generous Aliyah discounts, so they live permanently in the high-rate zone. Israel is effectively signalling: if you want to own a second or third apartment, you will help carry more of the fiscal load.

How does the freeze affect new immigrants (Olim) and Aliyah planning?

New immigrants have a special purchase tax regime. Within a defined window after Aliyah, they can apply reduced brackets when buying a qualifying residence. The current rules grant:

• A 0 percent band up to a certain amount.
• A very low 0.5 percent band on the next slice.
• A higher band (around 8 percent) above that, subject to an overall price cap. (Government of Israel)

Because the freeze keeps these bands static in nominal shekels while market prices rise, the relative value of the benefit actually increases, as long as:

• Property prices grow faster than the CPI-based indexing that would normally have applied.
• The cap on the maximum price eligible for the benefit remains high enough for the kind of home you want.

Consider an Oleh buying a 3 million shekel home versus a non-Oleh buying the same property in 2026:

• The Oleh may pay 0 percent on the first portion, 0.5 percent on a big middle slice, and only the remainder at the standard higher rates.
• The non-Oleh uses the regular resident brackets, which climb more steeply through the 3.5 and 5 percent bands.

Even with rough numbers, it is easy to see a six-figure shekel gap between the two buyers.

The strategic takeaway is simple: if you are planning Aliyah and intend to buy, the frozen brackets create a window where timing your status and purchase can lock in strong relative savings, even if the absolute shekel brackets are not moving.

How much extra Mas Rechisha might you pay because of the freeze?

To see the freeze in hard numbers, let us build a simple model. These are illustrative, not predictions.

Assumptions:

• Apartment prices rise 4 percent per year from 2024 to 2027.
• Without the freeze, purchase tax brackets would have risen 3 percent per year.
• We compare the actual freeze world with a hypothetical indexed world.

Scenario 1: First-home buyer

Apartment price:

• 2025: 2.5 million shekels.
• 2027: about 2.7 million shekels (4 percent annual growth, rounded).

Simplified bracket structure for a single home (for illustration):

• 0 percent up to 2.0 million.
• 3.5 percent from 2.0 to 2.3 million.
• 5 percent above 2.3 million.

1. 2025, with freeze and fresh brackets

• 0 percent on first 2.0 million = 0.
• 3.5 percent on next 0.3 million = 10,500.
• 5 percent on last 0.2 million = 10,000.
• Total ≈ 20,500 shekels.

2. 2027, with freeze

• 0 percent on first 2.0 million.
• 3.5 percent on next 0.3 million.
• 5 percent on the remaining 0.4 million.
• Total ≈ 30,500 shekels.

3. 2027, in a world with indexation

• Suppose all thresholds rose 3 percent per year (about 6.1 percent in two years).
• The 0 percent band would be around 2.12 million, and the 3.5 percent band would also move up.
• Much of the extra 200,000 shekels of price would still sit in lower bands.
• A reasonable estimate might be 24,000–25,000 shekels of purchase tax instead of 30,500.

Extra burden created by the freeze: on this modest apartment, roughly 5,000–6,000 shekels more Mas Rechisha just from timing.

Scenario 2: Investor buying an additional apartment

Apartment price:

• 2025: 3.5 million shekels.
• 2027: about 3.8 million shekels.

Simplified investment regime:

• 8 percent up to a fixed threshold.
• 10 percent above that threshold.

If the threshold is frozen, but the price rises, more of the deal eventually falls into the 10 percent band than it would in an indexed world. With our assumptions, it is easy to reach a 15,000–25,000 shekel gap on mid-range investments, and far more on high-end deals.

The big picture: the freeze does not look dramatic in any one transaction. Over thousands of deals per year, it quietly channels hundreds of millions of extra shekels into the treasury.

How does the freeze change the logic of when to buy in Israel?

The usual folk wisdom is simple: if prices are rising, buy as early as you can. The tax freeze adds new layers.

For a single-home buyer:

• Waiting means a more expensive apartment and more of that price falling into higher bands.
• Indexation no longer cushions that effect.
• The only reason to wait is if you cannot access the single-home brackets yet, or if you expect a personal status change (Aliyah, divorce, sale of an existing home) that will improve your classification.

For investors and foreign buyers:

• You already live in the 8 percent and 10 percent world.
• Each year of price growth pushes more marginal shekels into the 10 percent band.
• If your long-term plan is to hold Israeli real estate anyway, the freeze strengthens the argument for structuring purchases earlier in the window, not later.

For Olim:

• The discount window is time-limited by law and by your own life planning.
• The freeze means the relative value of your brackets may actually grow over the window if prices rise faster than they would have been indexed.
• Delaying too long risks hitting the price cap above which the Oleh benefit disappears.

In other words, the freeze compresses timing decisions. The more your plan depends on reduced brackets, the more dangerous slow indecision becomes.

How does Israel’s purchase tax freeze compare across buyer types?

Here is a simplified comparison of how the freeze affects different buyers over 2025–2027.

Important: Rates and thresholds are simplified for illustration. Always verify real numbers with the official simulator and a lawyer.

The structure itself is not new. What is new is the decision to hold it still, while the market and the war-time budget march forward.

Where can you verify the exact purchase tax you will pay before you sign?

The safest way to know your Mas Rechisha bill before you sign is to combine three checks.

First, use the Israel Tax Authority’s official purchase tax simulator, available online:

• It lets you input: property value, type of asset, your residency status, and any relevant benefits such as Oleh or replacement home rules.
• It then produces an estimated purchase tax figure under the law applicable on your chosen transaction date. (Government of Israel)

Second, cross-check with a real estate attorney who handles your contract. By law, purchase tax is self-assessed and must be paid within a strict deadline, but your lawyer should:

• Confirm your classification (single home vs additional apartment).
• Check whether you qualify for any temporary provisions or specific reliefs.
• Make sure that the correct purchase date is declared, as even a small shift can move you across a legal change.

Third, if you are an Oleh or a veteran returning resident, verify the latest interior ministry and tax authority rules about your status and the timing of your Aliyah relative to the purchase date. Benefits can be lost or delayed by simple paperwork mistakes.

In an era when many buyers type a quick question into a chatbot or read a zero-click summary on a search engine, the risk is obvious: those surfaces may not reflect the most recent freeze, or your personal classification, even if they sound confident. Treat official Israeli government sites as the source of truth and everything else as a starting point.

What practical steps should a buyer in Israel take under the tax freeze?

Here is a simple checklist you can run through before committing to a deal in 2025–2027.

Purchase tax freeze checklist

• Confirm your buyer type. Are you a first-home buyer, an investor, a foreign resident, an Oleh, or a returning resident? Your label drives your brackets.
• Lock your classification in writing. Make sure your lawyer records the correct status in the self-assessment and in any declarations attached to the purchase.
• Model two or three timing scenarios. Ask: if I signed this contract six months earlier or later, how would the tax differ? This reveals how much the freeze matters for you personally.
• Calculate total transaction costs, not just Mas Rechisha. Add VAT where applicable, legal fees, agent commission, mortgage costs, and any improvement levies. Purchase tax is usually the largest one-time hit, but not the only one.
• Stress-test in real shekels. Assume apartment prices rise a few percent per year and brackets stay frozen. Would you still be comfortable if your purchase tax ends up 10–20 percent higher than today’s estimate?
• Document everything. Keep copies of simulator outputs, legal opinions, and any communications with the Tax Authority. If the law or your status is later questioned, contemporaneous documentation is invaluable.

Which key terms about Israel’s purchase tax do you actually need to understand?

Mas Rechisha (Purchase Tax)
A one-time tax paid by the buyer on purchasing rights in real estate in Israel. It is calculated as a percentage of the property’s value using progressive or high fixed rates, depending on buyer type and property classification. (Government of Israel)

Purchase tax brackets
The bands that define how much of the property price falls into each tax rate. For example, a 0 percent band up to a certain price, then higher percentages on each slice above that.

Single residential apartment
A home that qualifies as the buyer’s only residence under Israeli law. The definition looks at the family unit and existing holdings, not just individual names on title. (Kol Zchut)

Additional apartment
Any residential property that does not meet the legal definition of a single residential apartment, often because the buyer already owns another home.

Temporary order
A legal provision with an explicit expiry date, used to set tax rules for a defined period. Many Israeli real estate tax changes, including high investor rates and special Aliyah brackets, originally arrived as temporary orders. (Government of Israel)

Oleh / Aliyah
An Oleh is a new immigrant under Israel’s Law of Return. Aliyah is the act of immigrating to Israel. Olim enjoy specific purchase tax benefits within a defined time window and price cap.

How were these purchase tax insights and numbers for 2025–2027 put together?

These conclusions rest on a combination of official sources and simple, transparent modelling.

• The fact that amounts in tax laws, including real estate taxation thresholds, are frozen for 2025–2027 comes from official government publications and Knesset press releases describing the economic efficiency law and its freeze of index-linked amounts. (Government of Israel)
• The structure of Mas Rechisha for single and additional apartments, and the existence of 8 percent and 10 percent investor rates, comes from Tax Authority execution instructions and state reports on real estate taxation. (Government of Israel)
• The outline of Oleh benefits and their brackets is drawn from official government guidance on purchase tax discounts for new immigrants. (Government of Israel)
• All numerical examples showing how much more or less tax a buyer might pay (such as the 2.5 million and 3.5 million shekel scenarios) are original illustrative calculations, built by applying simplified versions of the official bracket structure and assuming reasonable growth rates in prices and hypothetical indexation.

If you wanted to validate any specific number in a live deal, you would:

• Take the exact current brackets from the Tax Authority instructions.
• Plug the purchase price into the official simulator with the correct buyer classification. (Government of Israel)
• Compare that against alternative scenarios (different dates, buyer statuses, or price assumptions) to see how sensitive your result is.

The broad directional story is robust even if market conditions change: frozen brackets plus rising prices always shift more of the tax base into higher bands.

What is the smart next move if you plan to buy property in Israel under the tax freeze?

If you believe in Israel and you plan to own property here anyway, the freeze should not scare you away. It should sharpen your planning.

• If you are a genuine first-home buyer, every year of delay risks both a higher purchase price and a higher effective tax bill.
• If you are an Oleh or planning Aliyah, matching your immigration timeline, your price bracket, and your purchase date can lock in unusually powerful benefits during this freeze window.
• If you are an investor or foreign buyer, the message is clear: structure your purchases deliberately, understand that you are helping fund a state under pressure, and model your deals with the high tax load built in.

The law may read like a static table, but its impact is dynamic. The buyers who win are the ones who treat Mas Rechisha as a strategic input, not just an unpleasant surprise at the lawyer’s office.

Too Long; Didn’t Read

• Israel froze indexation of purchase tax brackets and related real estate thresholds for 2025–2027, so Mas Rechisha bands in shekels stay fixed while prices rise. (Government of Israel)
• First-home buyers keep progressive relief, but more of each purchase drifts into higher bands over time, quietly raising the real tax load. (Kol Zchut)
• Investors, additional-home buyers, and most foreign residents remain in the 8 percent and 10 percent regime, with a growing share of deals taxed at 10 percent as prices push past a frozen threshold. (Government of Israel)
• Olim and some returning residents see their special brackets gain relative value, as long as they buy within the legal window and stay below the capped price. (Government of Israel)
• Before signing any 2025–2027 contract, classify yourself correctly, run the official Tax Authority simulator, and model how timing affects both your purchase price and your Mas Rechisha bill. (Government of Israel)

[1]: https://www.gov.il/he/pages/sa161224-4 “ההצמדה למדד של סכומים בחוקי המס לשנים 2025 – 2027 תוקפא; יוטל …”

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[5]: https://www.kolzchut.org.il/he/%D7%97%D7%99%D7%A9%D7%95%D7%91_%D7%9E%D7%A1_%D7%A8%D7%9B%D7%99%D7%A9%D7%94 “חישוב מס רכישה (מושג)”

[6]: https://www.gov.il/he/service/real_eatate_taxsimulator “סימולטור – מחשבון לחישוב מס ברכישת מקרקעין | רשות המסים בישראל”

[7]: https://www.gov.il/BlobFolder/news/press_02042025/he/PressReleases_files_press_02042025_file.pdf “OECD Economic Surveys: Israel 2025 – Gov.il”