Quick Answer: Every non-resident who buys Israeli property pays 8% purchase tax (mas rechisha) on a home's price up to NIS 6,055,070 and 10% on any portion above, with no lower bracket and no exemption threshold. The tax is filed on Form 7002 with the Israel Tax Authority's Real Estate Taxation Office and must be paid within 60 days of signing the purchase contract. The Land Registry (Tabu) will not register your title until the ITA issues a tax clearance confirming payment. On a NIS 2,500,000 apartment, that means NIS 200,000 in purchase tax due within 60 days of signing. Israeli residents buying a first home pay 0% on amounts below approximately NIS 1,978,745. Foreign buyers get none of that relief. Budget 8% on top of the purchase price from day one.

Purchase tax is the single largest transaction cost of buying Israeli property for a foreign national. It dwarfs legal fees, agent commissions, and registration costs combined. Yet foreign buyers repeatedly underestimate or miscalculate it — sometimes discovering weeks after signing that they owe a sum they have not budgeted for and must pay within 60 days or face penalties that compound daily.

What follows covers exactly who the 8% rate hits, how it compares to what Israeli residents pay, whether any reductions exist, and how to complete the filing from abroad without missing the 60-day window.

1. What Is Purchase Tax (Mas Rechisha)?

Purchase tax (mas rechisha, also called mas rkhisha) is a transaction tax charged on every acquisition of real property in Israel. It is governed by Part Three of the Land Taxation Law 5723-1963 (Chok Misui Mekarkein). The tax is levied on the buyer — not the seller — and is calculated as a percentage of the full purchase price stated in the contract.

The Israel Tax Authority (Rashut HaMisim) administers purchase tax through its Real Estate Taxation Offices (misradei misui mekarkein), which sit in the ITA district offices in Tel Aviv, Jerusalem, Haifa, Beer Sheva, Netanya, Nazareth, and other cities. The office with jurisdiction is the one in the district where the purchased property is located, not where the buyer lives.

Purchase tax applies to:

  • Residential apartments, houses, and units — whether completed, under construction, or off-plan
  • Commercial property and offices (subject to different rate schedules not covered in this guide)
  • Land with or without a building
  • Long-term lease rights (zkhut chkira) from the Israel Land Authority — the purchase of a leasehold is treated as a purchase for tax purposes
  • Assignment of a purchase contract (stepping into another buyer's shoes) — taxable on the assignment price paid to the outgoing buyer

The tax is not optional and cannot be waived by contract. A clause saying "buyer and seller agree no purchase tax is payable" is legally void. The Israel Tax Authority is not a party to the contract and is not bound by it.

2. Who Counts as a Non-Resident for Purchase Tax Purposes?

The Land Taxation Law does not use the term "non-resident" in the same way as income tax legislation. For purchase tax purposes, the key distinction is whether the buyer qualifies as someone entitled to the reduced-bracket rates available to an Israeli resident buying their only or first apartment.

You are treated as a non-resident buyer — subject to the 8% and 10% non-resident rates — if any of the following applies:

  • You are a foreign national with no Israeli permanent residency or citizenship
  • You are an Israeli citizen or permanent resident who already owns residential property in Israel (whether personally or through a company you control), making this purchase a second or additional property
  • You are purchasing through a foreign company or through an Israeli company that does not qualify for the resident-buyer brackets
  • You have made Aliyah but more than seven years have passed since your immigration date

The 8% rate also applies to any Israeli resident who already holds an interest in an Israeli residential apartment — meaning most diaspora Israelis who return to buy a second property in Israel pay 8%, even if they hold Israeli citizenship. The resident-bracket relief is reserved for buyers who will genuinely be acquiring their only Israeli home.

In Practice: Joint Purchases and Mixed-Residency Couples

A purchase by two buyers where one is an Israeli resident (entitled to the lower brackets) and one is a foreign non-resident is treated as two separate purchases of a half-share each. The resident buyer's half-share is assessed under the resident rate schedule; the non-resident's half is taxed at 8%. This means a married couple — one Israeli citizen resident, one foreign national — buying a NIS 3,000,000 apartment will owe: resident rate on NIS 1,500,000 (half of the sole-apartment tax on the full NIS 3,000,000, about NIS 22,800 at the frozen brackets) plus 8% on NIS 1,500,000 (NIS 120,000). Instruct your Israeli conveyancing attorney to make sure the purchase contract and Form 7002 explicitly identify each buyer's share and residency status. Filing a single Form 7002 at 8% for the entire purchase when one buyer is entitled to resident rates is an overpayment that requires a formal refund application to correct.

3. The 8% Rate: How It Works

For a non-resident buyer, purchase tax equals 8% of the purchase price stated in the contract up to NIS 6,055,070, applied from the first shekel, and 10% on any portion above that. There is no minimum threshold, no lower bracket, and no exemption for first-time foreign buyers.

Eight percent of purchase price, full stop:

  • Purchase price: NIS 1,800,000 → purchase tax: NIS 144,000
  • Purchase price: NIS 2,500,000 → purchase tax: NIS 200,000
  • Purchase price: NIS 4,000,000 → purchase tax: NIS 320,000
  • Purchase price: NIS 6,000,000 → purchase tax: NIS 480,000

The purchase price for tax purposes is the price actually paid for the property, including any amount attributed to parking spaces, storage rooms, or other components of the transaction, but excluding moveable furniture and appliances that are genuinely sold separately under a distinct contract. If the Israel Tax Authority suspects that a portion of the price has been deliberately shifted to furniture to reduce the taxable base, it can challenge the allocation and assess the full residential price. Keep the furniture valuation realistic and document it separately.

Purchase tax is denominated in NIS. If the contract price is stated in USD, EUR, or another currency, the price is converted to NIS at the Bank of Israel representative rate on the contract-signing date for the purpose of calculating the tax base.

In Practice: Calculating Purchase Tax on a NIS 3,200,000 Apartment

Take a foreign buyer paying NIS 3,200,000 for a Tel Aviv apartment. Purchase tax at 8%: NIS 256,000. The buyer also owes: legal fees typically NIS 16,000–30,000 (0.5–1% of purchase price for conveyancing), agent commission NIS 96,000 (3% VAT-inclusive, though some agencies charge 2%), and Land Registry registration fees of approximately NIS 7,500–15,000 depending on mortgage. Total transaction costs before the purchase tax: approximately NIS 120,000–141,000. Adding NIS 256,000 purchase tax, total acquisition costs run NIS 376,000–397,000 above the purchase price, or roughly 11.8–12.4% on top. This is the number every foreign buyer should budget from the moment they start negotiations, not the day they sign. The purchase tax is due within 60 days of signing, well before the standard payment schedule in an Israeli off-plan purchase may complete — so cash must be available even if the final instalment is not yet paid.

4. How Israeli Residents Are Taxed Differently

The Land Taxation Law sets escalating brackets for Israeli residents buying their only home, normally updated each January, but frozen from 16 January 2025 until 15 January 2028. The current brackets are:

  • 0% on the portion up to approximately NIS 1,978,745
  • 3.5% on the portion from NIS 1,978,746 to approximately NIS 2,347,040
  • 5% on the portion from NIS 2,347,041 to approximately NIS 6,055,070
  • 8% on the portion above approximately NIS 6,055,070
  • 10% on the portion above approximately NIS 20,183,565 (the luxury bracket)

These thresholds are frozen until 15 January 2028. Verify the exact current figures with your Israeli attorney or from the ITA website at misim.gov.il at the time of your purchase.

On the same NIS 2,500,000 apartment used in the earlier example, an Israeli resident buying their only home would pay:

  • 0% on the first NIS 1,978,745 = NIS 0
  • 3.5% on the next NIS 368,295 = NIS 12,890
  • 5% on the remaining NIS 152,960 = NIS 7,648
  • Total: approximately NIS 20,538

A foreign non-resident pays NIS 200,000 on the same apartment. The NIS 179,462 difference is real money that changes the return math on any Israeli real estate investment, particularly at the lower and middle price points where purchase costs eat a larger share of a typical yield. At higher prices (above NIS 6 million) the gap narrows, because residents also pay 8% on the portion above the top bracket.

An Israeli resident buying a second apartment or investment property pays 8% from the first shekel — the same as a non-resident. The reduced-bracket schedule exists solely for a single-apartment first purchase. Any foreign buyer who is told by an agent that they "qualify for resident rates" should verify this claim directly with a licensed Israeli attorney before signing anything.

5. New Immigrants (Olim): The Reduced Rate

Olim — individuals who have made formal Aliyah under the Law of Return 5710-1950 — are entitled to a reduced purchase tax rate on the purchase of a sole Israeli apartment, provided the purchase occurs between one year before and seven years after their immigration date as registered by the Ministry of Interior Population Registry.

Under Regulation 12A of the Purchase Tax Regulations, the Oleh rate applies in these brackets:

  • 0% on the portion up to NIS 1,978,745 (the same first-bracket ceiling as for Israeli residents)
  • 0.5% on the portion up to NIS 6,055,070, and the ordinary sole-apartment rates (8%, then 10%) above that

This gives an Oleh buying a NIS 2,500,000 apartment a purchase tax bill of approximately:

  • 0% on NIS 1,978,745 = NIS 0
  • 0.5% on NIS 521,255 = NIS 2,606
  • Total: approximately NIS 2,606

Compared to a non-resident paying NIS 200,000, the Oleh benefit saves approximately NIS 197,400 on the same property.

To claim the Oleh rate, the buyer must file Form 7002 marked with the Oleh status and attach a copy of the teudat oleh (immigrant certificate) issued by the Ministry of Interior. The ITA verifies the Aliyah date against the Population Registry. The seven-year window is measured from the exact date of Aliyah, not the date of permanent residency grant — confirm the date on your immigrant certificate before assuming you are within the window.

In Practice: Olim Buying from Abroad Before Aliyah

A common scenario: a family overseas plans Aliyah, signs a purchase contract before landing in Israel, then makes Aliyah shortly after. If the contract is signed before the Aliyah date, the buyer is technically a non-resident at the time of signing and Form 7002 would normally be filed at 8%. However, Regulation 12A covers a purchase made from one year before the Oleh first arrives in Israel to seven years after arrival (the window is set by reference to Regulation 12(b)); for an apartment still under construction, the construction period is not counted, provided no more than three years pass between the purchase and arrival and the Oleh's status document is issued within a year of the purchase. A buyer who paid the ordinary rate before Aliyah can ask the Real Estate Taxation Office to correct the assessment and refund the difference once Oleh status is granted: the Director may correct an assessment within four years of its approval (Section 85 of the Land Taxation Law), and tax found not to be due is refunded under Section 103. Neither the Law nor the Regulations set a 60-day deadline for this request, but ask your attorney to file it as soon as the status document is issued. If you are planning Aliyah and also planning to buy Israeli property, sequence the purchase to occur after your Aliyah date whenever possible — the tax saving in the hundreds of thousands of shekels is worth the wait. If that is impractical, notify your Israeli conveyancing attorney of your Aliyah plans at the outset so the filing strategy can account for the retroactive correction procedure.

6. How and When to File and Pay

Purchase tax is self-assessed. The buyer (or their attorney) calculates the tax and files the declaration within 30 days of the contract date, then pays within 60 days of that date. The ITA does not issue a tax bill and does not send a reminder.

The filing document is Form 7002 (hatzhara al rechisha, Declaration of Purchase). Form 7002 requires:

  • Full details of the buyer(s): name, passport number or Israeli ID, address, residency status
  • Full details of the property: address, Land Registry block and parcel number (gush and helka), apartment number, floor
  • Purchase price and payment schedule
  • The tax category claimed (resident, non-resident, Oleh) and the rate applied
  • Any exemption claimed, with supporting documentation

Form 7002 is filed in person or through a licensed attorney at the ITA Real Estate Taxation Office for the district where the property is located. As of 2026, the ITA also accepts digital submissions of Form 7002 for certain transaction types through the ITA's online portal (shastil.misim.gov.il) — confirm with your attorney whether your specific transaction qualifies for online filing, as some categories still require in-person submission.

Payment is made at the ITA office or by bank transfer to the ITA's designated account at the time of filing. Once payment is confirmed, the ITA issues a clearance certificate (ishur misui) confirming purchase tax has been paid. This certificate is a mandatory document for the Land Registry (Tabu) to process the title transfer — without it, registration cannot proceed regardless of how long ago you signed or paid the seller.

Foreign buyers who cannot travel to Israel can appoint their Israeli conveyancing attorney via a notarised and apostilled power of attorney to file Form 7002 and pay purchase tax on their behalf. This is standard practice. The attorney files using the power of attorney and the buyer's supporting documents. Confirm explicitly with your attorney that Form 7002 filing and purchase tax payment are included in their engagement scope — some attorneys quote legal fees for the conveyancing but treat the purchase tax filing as a separate billed item.

In Practice: The 30-Day and 60-Day Deadlines in Off-Plan Purchases

In an off-plan (new build) purchase, buyers often sign a purchase contract and then pay instalments over 18–36 months as construction progresses. The purchase tax declaration is still due within 30 days, and the tax within 60 days, of contract signing, not of the final payment or handover. An off-plan buyer who signs in September and pays only a 10% deposit at that point still owes the full purchase tax on the full contracted price within 60 days. Developers' sales representatives sometimes tell buyers that purchase tax is "payable at handover" — this is incorrect and has caused serious penalty situations. The purchase tax is based on the full contracted price and the deadline is fixed at contract date. The ITA may examine a self-assessed declaration within eight months of filing (Section 78(b) of the Land Taxation Law) and may correct an assessment within four years of its approval, for example where new facts come to light or the declaration was wrong (Section 85). Underpaid tax then carries linkage and interest from 60 days after the purchase (Section 94). Do not rely on verbal reassurances from the developer's sales office about tax deadlines — verify in writing with your own attorney before signing.

7. Late Payment: Interest, Linkage, and Penalties

Miss the deadlines and three separate costs start running:

CPI linkage (hatzmadat madad): Under the Adjudication of Interest and Linkage Law 5721-1961, the unpaid tax principal is linked to the Consumer Price Index from the original due date. In periods of elevated Israeli inflation, this linkage alone can add 5–10% annually to the outstanding balance.

Annual arrears interest (rishkamit pirion): Statutory interest accrues on the linked balance at the rate set by the Minister of Finance — currently approximately 4% per year. This compounds with the CPI linkage.

Penalty for failure to file (knas): Section 94a of the Land Taxation Law authorises the ITA to impose a financial penalty for failing to file Form 7002 within the required period. The penalty is calculated as a percentage of the tax owed and is assessed even if you eventually pay the tax in full — it is a penalty for the late filing, not for the late payment.

Registration block: The Land Registry will not process the title transfer without the ITA clearance certificate. A delayed filing means a delayed registration — and in a transaction with a mortgage, the bank's disbursement of the full loan amount may be conditional on title registration, creating a chain of delays.

In practice, a six-month delay on a NIS 200,000 purchase tax bill can add NIS 15,000–30,000 in combined interest, linkage, and penalties. A 12-month delay can push the additional cost to NIS 30,000–50,000. The ITA does not grant extensions for non-residents on the basis that they are abroad, did not receive advice, or were unaware of the deadline.

8. Four Common Mistakes Foreign Buyers Make

1. Budgeting 5% instead of 8%. Many foreign buyers who have read general articles about Israeli purchase tax online come away thinking the rate is 5% or that there is a bracket below which they pay less. The reduced resident rates are widely discussed in Israeli real estate marketing — because they apply to the majority of domestic buyers — and the non-resident 8% rate is sometimes underemphasised. If you are not an Israeli resident purchasing your only home, assume 8% until a licensed Israeli attorney confirms otherwise in writing.

2. Counting from transfer of possession, not contract signing. Both deadlines run from the day the binding agreement is signed: 30 days for the declaration and 60 days for payment. Buyers who confuse "possession" (when they get the keys) with the trigger event often miss the filing window.

3. Assuming the developer or agent handles filing. Form 7002 is the buyer's obligation, not the developer's. A developer's lawyer files the seller's capital gains documentation separately. Some buyers assume the developer's legal team has submitted everything and discover months later that their own Form 7002 was never filed. Your attorney must explicitly confirm that Form 7002 has been submitted and that payment confirmation from the ITA has been received.

4. Including furniture in the purchase price on Form 7002. If you have a separate and genuine furniture agreement, the furniture value is excluded from the purchase tax base. But if you sign a single purchase contract that includes furniture, the ITA will tax the full amount. Structure the transaction with a separate, realistic furniture contract before signing the main purchase agreement — do not try to insert it retroactively after a purchase tax audit query arrives.

Frequently Asked Questions

Non-residents pay 8% purchase tax (mas rechisha) on the price of a residential property up to NIS 6,055,070 and 10% on any portion above that, with no lower bracket exemption and no minimum threshold below which the tax does not apply. These rates are set by the Land Taxation Law 5723-1963 and applies equally to individuals and foreign companies. On a NIS 2,500,000 apartment, that is NIS 200,000 in purchase tax payable within 60 days of signing the contract.

The 60-day payment clock starts on the day of the purchase, which is the day a binding purchase agreement is signed, not the day possession is handed over (Section 90A of the Land Taxation Law). The declaration on Form 7002 has a shorter deadline of 30 days from the same date (Section 73). If you sign on 1 September, the declaration is due by 1 October and payment by 31 October. The Israel Tax Authority does not grant extensions simply because the buyer is abroad; the deadlines apply to non-resident buyers in exactly the same way as to Israeli residents.

For most foreign nationals, no. The 8% non-resident rate applies regardless of passport, intended use, or whether the buyer is Jewish. The only statutory paths to a lower rate are: qualifying as an Oleh (new immigrant) buying a sole apartment from one year before to seven years after Aliyah, which gives 0% on the first NIS 1,978,745 and 0.5% up to NIS 6,055,070; or purchasing as a gift to a direct relative, which attracts one-third of the standard rate. Buying through an Israeli company does not reduce the rate. Any advisor suggesting otherwise should provide the specific statutory basis in writing before you rely on it.

Late payment triggers CPI linkage and annual arrears interest under the Adjudication of Interest and Linkage Law 5721-1961, plus a separate penalty for late filing under Section 94a of the Land Taxation Law. In practice, a six-month delay on a NIS 200,000 purchase tax bill can add NIS 15,000–30,000 in combined interest and penalties. More critically, the Land Registry (Tabu) will not register your title until the ITA issues the clearance certificate confirming payment — late purchase tax directly delays your legal ownership registration.

The buyer pays purchase tax (mas rechisha). The seller pays a separate tax on the capital gain from the sale (mas shevach), also administered under the Land Taxation Law 5723-1963. Both taxes must be cleared with the Israel Tax Authority before the Land Registry processes the title transfer. A contract clause shifting purchase tax liability to the seller is void as against the ITA — the ITA will collect from the buyer regardless of what the contract says, though the buyer may have a private claim against the seller under the contract.