The definitive guide to Israel’s real estate purchase tax (Mas Rechisha) for 2026

If you are looking to buy property in Israel this year, you need to see this.

We have combined the latest government updates, the new VAT rules, and the specific 2025 tax brackets into one single resource.

Let’s dive right in.

The Big Picture: What Changed in 2025?

Before we get to the specific numbers, there are two major updates you need to know.

1. The VAT Hike

As of January 1, 2025, the Value Added Tax (VAT) in Israel increased from 17% to 18%.

Why does this matter?

If you are buying a new construction home, prices are usually quoted “Plus VAT.” This immediately increases your purchase price. It also raises the cost of ancillary services like lawyer fees and real estate agent commissions.

Note: This does not affect second-hand purchases between private individuals, as there is no VAT on those transactions.

2. The “Bracket Freeze”

Usually, tax brackets rise annually with the Home Price Index. This is good for buyers because as inflation rises, you pay less tax.

But for 2025, the government passed a “Temporary Order” (Horaat Shaa).

This order effectively freezes the tax brackets at 2024 levels (with only minor adjustments). In real terms, this means you may pay higher taxes compared to previous years because the brackets did not adjust fully for inflation.

Now, let’s look at the exact numbers.

1. Single Residential Home (First or Only Apartment)

This category applies if you are an Israeli resident and:

• This is your first home.
• This is your only property.
• OR you are upgrading and sell your existing home within 18 months of buying the new one.

The tax is calculated progressively. You only pay the specific rate on the portion of the value that falls within that bracket.

Here are the 2025 brackets (effective Jan 16, 2025):

2. Investment or Additional Property

This category applies to:

• Investors owning more than one home.
• Foreign residents (regardless of whether they own another home).
• Israeli residents buying a second home who do not sell their first one.

The “No-Exemption” Rule

Unlike the single home buyer, there is no 0% bracket here. You pay tax from the very first shekel.

The 2026 Extension

This higher tax regime for investors has been officially extended through December 31, 2026.

Here are the 2025 brackets for investors:

3. New Immigrant (Oleh) Benefits

If you are a new immigrant (Oleh), you have access to a special reduced tax structure.

The New Rules (August 2024 Update)

New regulations came into effect in August 2024 that changed how this benefit works.

• Eligibility: Valid for a period of 7 years after making Aliyah.
• Usage: Can be used for a home you live in, or arguably for investment purposes (due to new flexibility in the law).

Here are the 2025 Olim brackets:

Crucial Warning: The benefit is now capped. If the total value of the property exceeds approximately 20.18 million NIS, you cannot use the Oleh benefit at all. You will be forced to pay standard tax rates.

4. Non-Residential Property

Buying an office, store, or plot of land?

The progressive brackets do not apply here.

• Commercial/Land: These properties are taxed at a flat rate, typically 6% of the total value.

Important Administrative Details

To wrap this up, here are the logistical details you cannot overlook:

• Payment Deadlines: Purchase tax must be paid by the buyer within defined deadlines after signing the purchase agreement.
• Annual Updates: While these are the 2025 numbers, rates are legally updated annually based on the Consumer Price Index (CPI) and legal adjustments. The brackets listed above are based on the update effective January 16, 2025.
• Verification: Always confirm the exact brackets at the moment of signing your contract. You can use the Israel Tax Authority simulator for the most precise calculation.