Property taxes and costs in Israel

Purchase tax (mas rechisha)

There are no “notary fees” in Israel: each side has its own lawyer, and the main cost on top of the price is purchase tax, paid to the Tax Authority within 60 days of signing. It is progressive — each rate applies only to its own band of the price — and above all it depends on your status.

The bands in force

These thresholds are frozen until 15 January 2028. The 8% and 10% rates (additional home, foreign resident) are a temporary measure, extended to 10 February 2027; the government that follows the next election will decide what comes after.

Who qualifies for what

• Only home: you, your spouse and your minor children own no other home in Israel. A home abroad does not count.
• Replacing a home: if you already own one, you keep the only-home rate provided you sell the old one within 24 months of buying.
• Foreign resident: 8% then 10%, even on a first purchase in Israel. If you make aliyah within a year of buying, you can claim the oleh rate, provided it is your only home in Israel.
• New oleh: only home in Israel, bought from one year before aliyah to seven years after, once. Above ₪20,183,565 the relief disappears entirely: the whole price then follows the only-home scale.
• Oleh who arrived before 15 August 2024: they may choose the former rule — 0.5%, then 5% — even if it is not their only home, for a purchase made from one year before aliyah to seven years after.
• Israeli returning after at least ten years abroad (toshav hozer vatik): if they become a resident again within two years of buying, they can claim the only-home rate, if it is their only home in Israel.

The other costs of buying

• Lawyer: checks the property at the land registry (the Tabu), drafts the contract and reports the sale. Fees are negotiable, often between 0.5% and 1% of the price, plus VAT (18%).
• Agency commission: in Israel the buyer usually pays a commission, often around 2% of the price, plus VAT.
• Financing: if you borrow, allow for the bank’s valuation (the shamai), the arrangement fees, the loan insurance and, if you use one, a broker.
• VAT: the price of a new home sold by a developer includes it; between private parties there is none.
• Moving the money: if your funds are abroad, compare your bank’s exchange rate and fees. On several million shekels, the difference quickly runs into thousands.

How much to budget on top of the price?

For a ₪5,000,000 flat, with 0.5% for the lawyer and 2% commission, VAT included: about ₪547,500 for a foreign resident (10.9% of the price), ₪293,000 for an Israeli resident buying their only home (5.9%), and ₪162,600 for a new oleh (3.3%). Before any mortgage costs.

Owning: running costs and rental income

• Arnona: the municipal tax, charged per square metre by zone and type of property, and paid by the occupant — by the tenant if the property is let. Discounts exist, for olim in particular.
• Vaad bayit: the monthly building charges, which vary a lot from one building to the next (lift, concierge, upkeep). On my portal, every property shows both amounts.
• Insurance: home insurance is advisable; if you borrow, the bank requires buildings cover and life cover.

Tax on rental income

For a long-term residential let, an individual chooses each year between three regimes:

• Exemption: no tax if the household’s total rent does not exceed ₪5,654 a month (2026). Above that, the exemption shrinks by the same amount, and is gone at ₪11,308.
• 10% of the gross rent, with no deductions, paid within 30 days of the end of the year.
• Standard regime: the income-tax scale, after deducting expenses and depreciation.

Short-term lets (Airbnb and the like) qualify for neither of the first two. And if you are a foreign resident, the rent is also declared in your own country under the tax treaty: have an accountant confirm the regime.

Reselling one day: capital gains tax (mas shevach)

Better to know it when you buy. On resale, the seller pays 25% of the real gain: the sale price, less the purchase price adjusted for inflation, less the deductible costs — purchase tax, lawyer, commission, improvement works. So keep every invoice from day one.

The only-home exemption

• it is your only home in Israel, and you have owned it for at least 18 months;
• you have not sold another home with this exemption in the previous 18 months;
• it covers a sale price of up to ₪5,008,000, a ceiling frozen until the end of 2027; above it, the share of the gain matching the excess is taxed;
• if you bought your new home before selling the old one, the old one stays exempt if it is sold within 24 months.

Foreign resident: the exemption is granted only if you prove, with a certificate from your own country’s tax authority, that you own no home there. For most buyers who keep a home abroad, the Israeli gain is therefore taxed at 25% — and is also declared in their own country, under the tax treaty.

The betterment levy (hetel hashbacha)

Another tax, a municipal one: if a planning scheme approved after your purchase raises the property’s value — building rights, for example — the city takes 50% of that increase. It is usually paid on resale, by the seller, unless the contract says otherwise. Exemptions exist; your lawyer checks this when you buy and when you sell.

Finally, for annual incomes above about ₪720,000, a 3% to 5% surtax can apply to a non-exempt resale above about 5.4 million shekels.

Common questions

Are there notary fees in Israel?

No. There is no notary in the continental sense: each side has its own lawyer, who checks the property, drafts the contract and reports the sale to the Tax Authority. The closest thing to “notary fees” is purchase tax — from 0% to 10% depending on your status and the price.

I am a foreign resident: should I wait for my aliyah to buy?

Not necessarily: a purchase made in the year before aliyah already qualifies for the oleh rate, on request and if it is your only home in Israel. The timing is planned with your lawyer before the offer, not after.

Who pays purchase tax, the buyer or the seller?

The buyer. The seller pays capital gains tax (mas shevach) and, where it applies, the municipal betterment levy.