Purchase Tax (Mas Rechisha)

When buying an apartment, the price of the property is not the only expense. One of the most significant items to budget for in advance is purchase tax — paid to the Tax Authority simply for acquiring the property.

The gap between a first-home buyer and an investor is dramatic: many single-apartment buyers pay little or nothing, while an investor pays substantial tax from the very first shekel.

This guide sets out the updated brackets, how to calculate, who qualifies for exemptions, and when payment falls due.

Disclosure: This information is provided as an educational aid only and does not constitute tax advice. The purchase tax brackets were frozen in the Arrangements Law and are due to remain unchanged until 15 January 2028, but figures and conditions may be updated — verify with the Tax Authority or a real estate lawyer before acting. Any action you take is your own responsibility.

What purchase tax is

Purchase tax is levied on the buyer when acquiring a right in real property — an apartment, a house or a plot. It is calculated as a percentage of the transaction value using graduated brackets, similar to income tax brackets: each layer of value is taxed at its own rate.

The amount depends on two main factors: the value of the property and the type of buyer, meaning single apartment versus additional apartment.

The tax is paid within a defined period from the transaction date, usually through the lawyer handling the purchase, and forms part of the ancillary costs that must be budgeted alongside equity. See the full mortgage guide.

Brackets for a single apartment (2026)

A buyer of a single apartment, meaning someone who owns no other property, benefits from an exempt bracket and reduced rates:

The practical meaning: anyone buying a single apartment worth up to roughly 1.98 million ₪ is completely exempt from purchase tax. Only the portion above that is taxed, and in graduated steps. This is significant relief for first-time buyers.

Brackets for an additional apartment (2026)

Someone who already owns an apartment and buys another — an investor, or a home upgrader who has not yet sold — pays tax from the first shekel, at higher rates:

The difference is enormous. On a property worth 2 million ₪, a single-apartment buyer pays only a few thousand shekels, covering just the portion above the exemption, while an investor pays 8% — around 160,000 ₪. This is one of the central considerations in any property investment decision.

Exemptions and special reliefs

Beyond the single-apartment brackets, reliefs exist for particular groups: new immigrants, with special brackets during a defined period after immigration; people with disabilities and victims of hostile actions, subject to conditions; and transfers without consideration between relatives, meaning gifts, which are taxed at a reduced rate.

Every relief is subject to conditions, so checking specific eligibility is worthwhile rather than assuming.

Home upgraders — the time window that saves money

A critical point for anyone upgrading: someone selling an existing apartment and buying a new one can benefit from the single-apartment brackets on the new property, provided the old one is sold within the period set in law.

Anyone who misses that timetable is classified as buying an "additional apartment" and pays 8% instead of the relief. Correct planning of sale and purchase timing is worth tens of thousands of shekels here.

How the calculation works

The calculation is cumulative across brackets: each layer of value is taxed at its own rate, and the amounts are summed.

For example, a single apartment worth 2.5 million ₪: the layer up to 1,978,745 is exempt; the layer from 1,978,745 to 2,347,040 is taxed at 3.5%; and the layer from 2,347,040 to 2,500,000 is taxed at 5%. Adding the three layers gives the total tax.

Because the calculation is fiddly, the Tax Authority operates an official free purchase tax simulator. Enter the value and buyer type and receive the exact figure. This is the recommended step before any transaction.

When and how payment is made

Purchase tax is reported and paid within a defined period from signing the purchase contract. In practice the process is almost always handled through the lawyer managing the transaction, who files the self-assessment and produces the payment voucher.

Late payment can attract interest and linkage charges, so meeting the deadline matters.

Common mistakes

1. Not budgeting purchase tax in advance. It is part of the capital you need, not a surprise.

2. A home upgrader missing the window to sell the old apartment, and being classified as an investor at 8% instead of receiving relief.

3. Not checking eligibility for relief. New immigrants, people with disabilities and gift recipients may pay less.

4. Relying on a rough estimate. Always calculate in the official simulator using the exact value.

5. Confusing purchase tax with betterment tax. Purchase tax is paid by the buyer; betterment tax by the seller.

Summary

Purchase tax is one of the largest ancillary costs of buying an apartment, and precisely for that reason it should be calculated in advance rather than encountered unprepared. The gap between a single and an additional apartment reaches tens and even hundreds of thousands of shekels, and for home upgraders the timing of the sale is critical.

Before a transaction, calculate the exact amount in the official simulator and build it into the total budget. For a wider view of financing the purchase see the mortgage guide, and for the tax that belongs to the seller, the betterment tax guide. For tax generally: the taxes section. We provide the knowledge — the decisions remain yours.