When you buy property in Israel as a foreign national or diaspora buyer, one of the most significant costs you'll face is mas rechisha (מס רכישה) — Israel's property purchase tax. Understanding this tax is essential for accurate budgeting.
What is mas rechisha?
Mas rechisha is a one-time tax paid by the buyer at the time of property purchase in Israel. It is calculated as a percentage of the purchase price and varies based on:
- ·Whether you are an Israeli resident or foreign buyer
- ·Whether this is your only property or you own additional properties
- ·The price of the property
2025 purchase tax rates for foreign buyers
Foreign nationals and Israelis who already own property in Israel pay at the higher rate bracket:
| Purchase price (NIS) | Tax rate |
|---|---|
| Up to ₪6,055,070 | 8% |
| Above ₪6,055,070 | 10% |
Example: Buying an apartment for ₪3,000,000 (~$810,000):
- ·Mas rechisha = ₪3,000,000 × 8% = ₪240,000 (~$65,000)
Purchase tax rates for first-time Israeli residents
For comparison, Israeli residents buying their first property pay at much lower rates:
| Purchase price (NIS) | Tax rate |
|---|---|
| Up to ₪1,978,745 | 0% |
| ₪1,978,746 – ₪2,347,040 | 3.5% |
| ₪2,347,041 – ₪6,055,070 | 5% |
| Above ₪6,055,070 | 10% |
Are there exemptions for olim (new immigrants)?
Yes. Olim hadashim (new immigrants) who purchase property in Israel receive a significant one-time discount on mas rechisha:
- ·Reduced rate of 0.5% on the first ₪1,978,745 of the purchase price
- ·Standard first-home rates apply on the amount above
This benefit can be used once per oleh and is available for up to 7 years from the date of aliyah.
When is mas rechisha paid?
Mas rechisha is paid to the Israeli Tax Authority (Misrad HaMisim) within 60 days of signing the purchase contract. Your lawyer typically handles this payment on your behalf.
Failure to pay on time results in interest and penalties — make sure your lawyer calendars this deadline.
Can mas rechisha be financed?
No. Mas rechisha cannot be included in your Israeli mortgage (mashkanta). It must be paid from your own funds. This is a critical cash-flow consideration — budget for it separately from your down payment.
Tips to minimize your purchase tax
- Consider your timing around aliyah — if you are planning to make aliyah, buying within the 7-year window can save tens of thousands of dollars.
- Buy in your name only if single — if one spouse already owns property in Israel, consider the tax implications of joint vs. single ownership.
- Get a tax opinion — for higher-value properties, an Israeli tax lawyer can sometimes identify legitimate planning strategies.
Frequently asked questions
Is mas rechisha the only tax I pay when buying?
Mas rechisha is the main purchase-time tax. You may also face:
- ·VAT (17%) — only on purchases from a dealer/developer (not on private resales)
- ·Lawyer fees (deductible for investment properties)
- ·Future capital gains tax (mas shevach) when you eventually sell
Does mas rechisha apply to parking spaces and storage rooms?
Yes. If these are purchased separately, their value is added to the apartment price for mas rechisha calculation purposes.
Can I get a refund if the deal falls through after I pay?
Yes. If the transaction does not complete after mas rechisha has been paid, you can apply for a refund from the Tax Authority.
Is mas rechisha the same as arnona (municipal rates)?
No. Arnona is an annual municipal property tax paid to the local municipality. Mas rechisha is a one-time purchase tax. They are completely separate.
Tax rates are updated periodically by the Israeli government. Always verify current rates with a licensed Israeli tax advisor or real estate lawyer.