Israel property tax at a glance:
- For an additional dwelling, and a residential purchase by someone other than an Israeli-resident individual, the current schedule is 8% on the portion up to ILS 6,055,070 and 10% above it. The Tax Authority notice of 12 October 2026 extends this schedule through 2027-02-10 inclusive. Eligibility for relief must be assessed separately; no later rate is assumed. For an eligible Israeli-resident individual buying a sole dwelling, Tax Authority instruction 1/2026 sets a zero-rate band up to ILS 1,978,745. The following marginal rates are 3.5%, 5%, 8% and 10%. These thresholds cover 2025-01-16 to 2028-01-15. Buyer classification, family ownership and replacement-home conditions require individual assessment.
- Selling: capital gains tax (Mas Shevach) depends on the seller, asset and acquisition history. A 25% rate applies to certain taxable real gains; exemptions, time apportionment and surtax can change the result.
- Renting: eligible residential rental income can qualify for an exemption, the 10% route or ordinary income-tax treatment. The 2026 full-exemption ceiling is 5,654 NIS a month, subject to the conditions and family-income aggregation rules.
- Other: the standard betterment levy is 50% of assessed planning uplift, subject to relief and special rules, with payment generally linked to realization. Standard VAT is 18%; developer sales and ordinary private resales have different VAT treatment.
- Foreign residents: purchase-tax classification and sale-tax relief use different tests. A foreign seller may qualify for a home-sale exemption if they provide the required evidence that they own no dwelling in their country of residence and satisfy the other conditions.
- Warning: every threshold and rate here can change. Confirm current numbers before you sign anything.
Israeli property is taxed at three moments: when you buy (purchase tax), while you rent it out (rental income tax), and when you sell (capital gains plus a possible betterment levy). New homes also carry 18% VAT inside the price. This sub-hub explains each tax in plain English and links to the deep guides. It is part of our Israel real estate investment hub.
What taxes will I actually pay on Israeli property?
You face up to five taxes across the life of a property. The taxes that apply depend on the transaction, use and taxpayer. Here is the full map so you can see which ones apply to you.
| Tax | Hebrew name | When | Who pays | Headline rate |
|---|---|---|---|---|
| Purchase tax | Mas Rechisha | At purchase | Buyer | 0% to 10% (scale) |
| Rental income tax | Mas Hachnasa on rent | While renting | Owner/landlord | 0%, 10%, or marginal |
| Capital gains tax | Mas Shevach | At sale | Seller | Rate depends on acquisition history, seller and relief |
| Betterment levy | Hetel Hashbacha | Liability from a qualifying planning event; payment generally on realization | Seller/owner | Standard 50% of assessed planning uplift, subject to relief |
| VAT | Ma’am | New-build purchase | Buyer (in price) | 18% |
How much is purchase tax (Mas Rechisha) when I buy?
For an additional dwelling, and a residential purchase by someone other than an Israeli-resident individual, the current schedule is 8% on the portion up to ILS 6,055,070 and 10% above it. The Tax Authority notice of 12 October 2026 extends this schedule through 2027-02-10 inclusive. Eligibility for relief must be assessed separately; no later rate is assumed. For an eligible Israeli-resident individual buying a sole dwelling, Tax Authority instruction 1/2026 sets a zero-rate band up to ILS 1,978,745. The following marginal rates are 3.5%, 5%, 8% and 10%. These thresholds cover 2025-01-16 to 2028-01-15. Buyer classification, family ownership and replacement-home conditions require individual assessment.
| Buyer type | 0% | Next bands | Top band |
|---|---|---|---|
| Israeli resident, only home | Up to 1,978,745 | 3.5% to 2,347,040; 5% to 6,055,070; 8% to 20,183,565 | 10% above 20,183,565 |
| Investor / additional home | None | 8% up to 6,055,070 | 10% above 6,055,070 |
| Most foreign residents | None | 8% up to 6,055,070 | 10% above 6,055,070 |
An eligible oleh may claim one-time home-purchase relief within the prescribed period from one year before entry to seven years after. Under Regulation 12A, an eligible sole or replacement home is taxed at 0% up to 1,978,745 NIS, 0.5% on the next portion up to 6,055,070 NIS, and 8% on the portion up to 20,183,565 NIS. If the total home value exceeds 20,183,565 NIS, Regulation 12A relief does not apply; assess eligibility under the ordinary rules. These thresholds run through 15 January 2028. The transitional option to use the former Regulation 12 for a later purchase depends on aliyah before 15 August 2024, not simply on when the purchase took place. The home-use, eligibility and prior-benefit conditions must also be checked.
For the full investor bracket detail and worked sums, read our Mas Rechisha bracket guide. For the residents-versus-non-residents split, see how foreign buyers hit the 8% reality. Your starting point depends on residency, which we sort out in our buyer-status guide.
Worked example: purchase tax gap, resident vs investor (our own math, not official)
Take a 3,000,000 NIS apartment. An Israeli resident buying their only home pays 0% on the first 1,978,745, then 3.5% on the slice to 2,347,040, then 5% on the rest:
- 0% on 1,978,745 = 0 NIS
- 3.5% on (2,347,040 – 1,978,745) = 3.5% of 368,295 = 12,890 NIS
- 5% on (3,000,000 – 2,347,040) = 5% of 652,960 = 32,648 NIS
- Resident total: about 45,538 NIS
An investor pays a flat 8% on the whole 3,000,000 = 240,000 NIS. The gap is 240,000 – 45,538 = about 194,462 NIS, or roughly 6.5% of the price. In this illustration, the purchase-tax difference is about 6.5% of the price. Sole-home eligibility depends on the statutory rules, not just whether this is the buyer’s first purchase.
What is capital gains tax (Mas Shevach) when I sell?
Mas Shevach is calculated under rules for acquisition value, eligible costs, inflation and the relevant holding periods. A 25% rate applies to certain taxable real gains, but older acquisition periods, qualifying-home apportionment, exemptions and surtax can change the result.
The sole-dwelling exemption has cumulative conditions. They include a qualifying dwelling, the required ownership classification, at least 18 months of ownership from when it became a dwelling, and no other sale using this exemption in the preceding 18 months. The exemption ceiling is 5,008,000 NIS through 31 December 2027; a sale above it can receive proportional relief rather than automatically losing all exemption. A foreign resident must provide the prescribed evidence of no dwelling in the country of residence, as well as meeting the other conditions. Review the complete eligibility rules on the single-home CGT exemption page.
Read the mechanics in our capital gains tax guide. To cut the bill legally, you raise your cost basis, which we cover next.
How do cost basis and deductible costs lower my exit tax?
The calculation can take account of acquisition value and qualifying expenses under sections 39 and 39A, with the required statutory adjustments. Purchase tax, legal or brokerage costs and capital improvements may qualify where the conditions are met, supported by evidence and not already deducted against income. A receipt alone does not make every renovation or payment deductible.
Worked example: how a higher basis cuts the 25% bill (our own math, not official)
For an arithmetic illustration, assume a 2,000,000 NIS purchase, a 2,800,000 NIS sale, and that 160,000 NIS purchase tax, 40,000 NIS legal and brokerage costs and 150,000 NIS of capital improvements all qualify for deduction. Also assume a 25% rate and ignore inflation, depreciation, relief and surtax.
- Adjusted basis: 2,000,000 + 160,000 + 40,000 + 150,000 = 2,350,000 NIS
- Illustrative gain before inflation and other adjustments: 2,800,000 − 2,350,000 = 450,000 NIS
- Tax at 25%: 112,500 NIS
Under these assumptions, excluding the 350,000 NIS of qualifying costs produces 800,000 NIS of gain and 200,000 NIS of tax; including them produces 112,500 NIS of tax, a difference of 87,500 NIS. Actual assessments also require the relevant inflation, depreciation and relief calculations. See the full method in our guide to cost basis and deductions on your exit tax.
How the betterment levy (Hetel Hashbacha) works
Betterment levy generally charges 50% of the assessed increase attributable to a qualifying plan, variance or exceptional-use approval. The liable owner or long-term lessee and the payment date depend on the statutory rules; payment is generally triggered by realization, such as a relevant sale, permit or use. Urban-renewal projects can have special rates or exemptions, which must be checked for the actual plan and authority.
This levy is separate from capital gains tax and is easy to forget, yet it can be large where a city grants extra floors or density. The rules and a live legal fight over how they apply are covered in our betterment levy guide.
How is rental income taxed in Israel?
Eligible individual landlords should compare the available residential-rental routes. The full-exemption ceiling is 5,654 NIS a month in 2026, with qualifying rent aggregated under the family-unit rules and partial exemption potentially available above the ceiling. Section 122 permits a 10% route for qualifying non-business residential rent; ordinary expense deductions are generally unavailable, but section 122(f) provides a limited exception for qualifying rent paid by a sole-home owner. The statutory payment deadline is within 30 days after the tax-year end, subject to applicable payment instructions or extensions. Ordinary income-tax treatment allows only legally deductible expenses and depreciation.
| Track | How it works | Best for |
|---|---|---|
| Exempt | 2026 full-exemption ceiling 5,654 NIS/month; conditional partial exemption above | Small or single rentals under the ceiling |
| Flat 10% | 10% route, generally without ordinary expenses; limited section 122(f) exception | Higher rents with few costs |
| Marginal | Your income-tax rate after expenses and depreciation | Compare qualifying deductions and the income’s legal classification |
If your rent sits just above the exempt ceiling, the exemption tapers rather than vanishing. Full details, including the partial-exemption math, are in our rental income tax guide. To pressure-test whether a property pays after tax, use the methods in our deal-analysis guide.
Does VAT (Ma’am) apply to property?
VAT is 18% and it mainly hits new-build homes. When you buy from a developer, the 18% VAT is already inside the quoted price, so you do not pay it separately. A normal resale between private individuals is generally not VAT-able, which is one reason resale and new-build prices are not directly comparable. The 18% rate has applied since 1 January 2025 per VATupdate. We compare new-build versus resale VAT in detail on the dedicated VAT page in this cluster.
What do foreign residents need to report?
For a residential purchase by someone other than an eligible Israeli-resident individual, the additional-dwelling schedule generally applies unless specific relief is available. A foreign seller can qualify for a home-sale exemption with the required evidence of no dwelling in the country of residence and the other eligibility conditions. Purchases and sales generally require real-estate tax declarations even where relief is claimed; rental reporting and payment depend on the applicable income-tax route and filing obligations. Currency swings between the shekel and your home currency add another layer, because your tax is figured in shekels even if your money is in dollars or euros. The common pitfalls are covered on the foreign-resident property traps page in this cluster.
Why do thresholds and rates keep changing?
For an additional dwelling, and a residential purchase by someone other than an Israeli-resident individual, the current schedule is 8% on the portion up to ILS 6,055,070 and 10% above it. The Tax Authority notice of 12 October 2026 extends this schedule through 2027-02-10 inclusive. Eligibility for relief must be assessed separately; no later rate is assumed. For an eligible Israeli-resident individual buying a sole dwelling, Tax Authority instruction 1/2026 sets a zero-rate band up to ILS 1,978,745. The following marginal rates are 3.5%, 5%, 8% and 10%. These thresholds cover 2025-01-16 to 2028-01-15. Buyer classification, family ownership and replacement-home conditions require individual assessment.
Tax checklist before you buy or sell
- Confirm your status: only-home, investor, oleh, or foreign resident. This sets your purchase-tax scale.
- Run today’s purchase tax on the exact price using current brackets, not last year’s.
- Keep invoices and payment evidence so your adviser can identify which purchase, sale and capital-improvement costs qualify and whether any amount was previously deducted.
- Compare the rental routes for which you qualify, including aggregation, business-income status and any section 122(f) deduction.
- Check for a betterment levy if any planning rights or rezoning touched your property.
- If selling, test all qualifying-dwelling, ownership, holding-period, prior-sale and residency-evidence conditions, and calculate any partial relief above the exemption cap.
- Get written confirmation of current rates from a licensed adviser before signing.
If you want a clear read on which taxes apply to your specific purchase or sale, talk to the Semerenko Group team and we will map it out with you.
By the Semerenko Group research desk. Reviewed by the Semerenko Group brokerage team. Last updated 15 June 2026. This page is general information, not tax or legal advice. Tax, legal, and finance rules change often: confirm current figures and your own position with a licensed Israeli tax lawyer or mortgage advisor before acting.
Sources
- Kol Zchut: purchase tax (Mas Rechisha) brackets
- PwC: Israel individual income determination (capital gains, rental tracks)
- VATupdate: Israel VAT to 18% from January 2025
- Calcalist: oleh purchase tax reform
Common questions
How much purchase tax does a foreign buyer pay in Israel in 2026?
The Tax Authority’s 12 October 2026 notice extends the additional-dwelling purchase-tax schedule through 2027-02-10 inclusive: 8% on the portion up to ILS 6,055,070, then 10% on the excess. The eligible Israeli-resident sole-dwelling schedule has a separate validity period. Tax Authority extension notice. A buyer’s tax classification and any relief require an individual assessment.
What is the capital gains tax rate when selling Israeli property?
A 25% rate applies to certain taxable real gains; acquisition history, exemptions, apportionment and surtax can change the result. The sole-dwelling exemption has cumulative conditions, including 18 months from when the property became a dwelling and restrictions on prior exempt sales. Its 5,008,000 NIS ceiling is fixed through 31 December 2027, with proportional treatment above it. Eligible foreign residents can claim relief with the required evidence that they own no dwelling in their country of residence.
Is rental income taxed in Israel?
Rental income may qualify for an exemption, the 10% residential-rent route or ordinary income-tax treatment. The 2026 full-exemption ceiling is 5,654 NIS a month, subject to family-income aggregation and the other conditions. The 10% route generally excludes ordinary expenses but has a specific section 122(f) exception for qualifying rent payments; business rental income requires separate treatment.
What is the betterment levy (Hetel Hashbacha)?
It is a planning-related levy, generally 50% of the assessed uplift from a qualifying plan, variance or exceptional-use approval, subject to statutory relief and special rates. Payment is generally linked to realization of rights. The liable party, planning trigger and any urban-renewal treatment need to be checked for the actual property.
Does VAT apply when buying property in Israel?
VAT (Ma’am) is 18% and mainly applies to new homes bought from a developer, where it is already inside the quoted price. A normal resale between private individuals is generally not VAT-able. The 18% rate has applied since 1 January 2025.
In-depth guides in this section
- Israel Purchase Tax (Mas Rechisha) 2026 Brackets
- Foreign Buyer Purchase Tax in Israel: 8% Reality
- Capital Gains Tax (Mas Shevach) on Israeli Property
- Betterment Levy (Hetel Hashbacha) in Israel
- Israel Rental Income Tax: Exempt, 10% or Marginal
- VAT on Israeli Property: New Build vs Resale
- Cut Your Israel Exit Tax: Cost Basis and Deductions
Checked 16 October 2026. This is general information, not legal or tax advice; confirm with a licensed professional.
