Real estate transactions are subject to taxation for both parties – the seller and the buyer.
These taxes are the Capital Gains Tax (Mas Shevach) and the Purchase Tax (Mas Rechisha).
While the Capital Gains Tax is linear and relatively straightforward to calculate,
the Purchase Tax includes tax brackets and distinctions between buying a first property and a second one.
Additionally, there are differences between residential properties, non-residential properties, and land,
and certain tax benefits apply in specific cases.
It’s possible to bring clarity to this complexity and explain exactly how the Purchase Tax is calculated.
## **Purchase Tax Brackets for Apartment Buyers and Tax Calculation in Israel**
When purchasing residential property in Israel, the buyer is required to pay a **Purchase Tax (Mas Rechisha)**. The tax rate depends on several factors, including:
* Whether the property is the buyer’s **only residence**.
* The **purchase price** of the property.
* Whether the buyer is a **foreign resident**, **Israeli citizen**, or purchasing an **investment property**.
* Whether the buyer is eligible for any **tax exemptions** or **benefits** (e.g., Olim Hadashim, disabled individuals, inheritance, etc.).
### 🧮 **How Purchase Tax Is Calculated**
Purchase tax is calculated using **progressive tax brackets**. Each portion of the property’s price is taxed according to its position within the applicable bracket. The rates are updated annually by the Israel Tax Authority, typically on **January 16**.
### 🏠 **Main Residence (Single Residential Property) – 2024/2025 Rates (valid from Jan 16, 2024):**
| Price Range (NIS) | Tax Rate |
| ————————- | ——– |
| Up to 1,919,155 | 0% |
| 1,919,156 – 2,276,360 | 3.5% |
| 2,276,361 – 5,872,425 | 5% |
| 5,872,426 – 19,574,755 | 8% |
| From 19,574,756 and above | 10% |
✅ These rates apply only if the buyer **does not own any other apartment** in Israel or if they commit to selling an existing apartment within 18 months.
—
### 🏘 **Investment Property / Additional Apartment**
If the buyer already owns a residential property in Israel, higher rates apply:
| Price Range (NIS) | Tax Rate |
| ———————— | ——– |
| Up to 6,469,500 | 8% |
| From 6,469,501 and above | 10% |
—
### 🌍 **Foreign Residents**
Foreign residents who do not hold Israeli residency (or do not meet the “only home” criteria) are typically taxed at the **investment property rates** unless they qualify for an exemption.
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### ✳️ **Special Cases and Exemptions**
Some buyers may be eligible for **reduced tax rates or exemptions**, such as:
* **Olim Hadashim (new immigrants)** – once within 7 years of Aliyah.
* **Disabled persons**, **bereaved families**, or **victims of terror**.
* **Inheritance of a property**.
* **Divorce settlements** or property transfer between family members.
Each case has its own eligibility requirements and documentation process.
—
### 🧾 Example Calculation – Main Residence:
A buyer purchases a **primary residence** worth **₪3,000,000**:
1. First ₪1,919,155 – 0% = ₪0
2. Next ₪357,205 (to ₪2,276,360) – 3.5% = ₪12,502
3. Remaining ₪723,640 (to ₪3,000,000) – 5% = ₪36,182
**Total Purchase Tax = ₪48,684**
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