Budget beyond the contract price for purchase tax, legal and brokerage fees with any VAT, and financing and appraisal costs. Purchase-tax relief depends on eligible resident single-home status or another specific relief, not simply on whether this is a first-ever purchase. Obtain written fee quotes rather than assuming a fixed percentage. To compare a home for your own use with an investment, see the rent-or-buy decision guide.
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.
The price on the contract is just the beginning of the story. Many first-time buyers in Israel are blindsided by a cascade of taxes and fees that can add a staggering 10% or more to the total cost of their home. Forgetting to budget for these “hidden” costs is a recipe for financial disaster.
Purchase Tax (Mas Rechisha) is calculated on the property’s value using the buyer’s applicable brackets. Eligible resident sole-home buyers use the reduced schedule. The regular additional-home schedule starts at 8% where no relief applies; replacement-home and other exceptions need a separate assessment.
Obtain separate written quotes for your lawyer, any broker, bank fees and the required valuation. Brokerage charges are agreed in the written engagement, which must state the fee and whether VAT is included. For budgeting only, a quoted 2% commission plus VAT is an example, not a statutory or universal market rate; your actual quotes determine the total.
The extra 10%: purchase tax plus fees
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Purchase Tax (Mas Rechisha): Apply the buyer’s correct resident sole-home, regular or other qualifying schedule.
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Professional Fees: Budget from the agreed legal and brokerage quotes, showing whether VAT is included.
- Mortgage costs: ask the lender which fees and valuation evidence apply. It may require a report, and qualifying external valuations can be usable under Directive451; do not assume every loan requires buying a new independent appraisal.
To compare current homes for sale, see our buy property in Israel page.
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Checked 16 October 2026. This is general information, not legal or tax advice; confirm with a licensed professional.
