Real estate taxation in Israel for non-residents
Mas Rechisha, capital gains, rental income: understand everything to optimize your investment.
How much Mas Rechisha do you pay when buying property in Israel? Mas Rechisha is a progressive purchase tax from 0% to 10%, calculated in brackets on the property price. For a primary residence, the first bracket — up to about 1.98 million shekels (scale frozen, in force until 15 January 2028) — is exempt. Investors and non-residents are subject to a higher scale from the first shekel.
| Property price bracket | Mas Rechisha rate |
|---|---|
| Up to 1,978,745 ₪ | 0% |
| From 1,978,745 ₪ to 2,347,040 ₪ | 3.5% |
| From 2,347,040 ₪ to 6,055,070 ₪ | 5% |
| From 6,055,070 ₪ to 20,183,565 ₪ | 8% |
| Above 20,183,565 ₪ | 10% |
Scale for the purchase of a single home by an Israeli resident. Amounts frozen by the 2025 Budget Law, in force until 15 January 2028 (Israel Tax Authority directive 1/2026).
In brief
- Non-resident: 8% up to ₪6,055,070 then 10%, from the first shekel — scale in force until January 15, 2028.
- Resident (sole home): 0% up to ₪1,978,745, then 3.5% / 5% / 8% / 10% per bracket.
- Oleh: 0% up to ₪1,978,745 then 0.5% up to ₪6,055,070, for 7 years after aliyah.
- Total budget: allow 10-15% on top of the price (tax, lawyer 0.5-1.5% + 18% VAT, agent ~2% + VAT).
- Resale: 25% Mas Shevach on the real capital gain.
- Rents: exemption up to ~₪5,654/month, 10% flat rate, or marginal scale.
Purchase tax: Mas Rechisha
The Mas Rechisha is Israel's property acquisition tax. Its calculation is progressive and differs by buyer status. For residents buying their sole property, brackets start at 0% up to 1,978,745 ₪. Non-residents are subject to higher rates, starting at 8% from the first shekel.
In 2026, non-resident brackets are: 8% up to 6,055,070 ₪, then 10% above. This tax is due within 60 days of signing.
Calculate your Mas Rechisha in 30 seconds Our tax simulator gives you the exact amount of your purchase tax based on your profile.
Double-taxation treaties: US, UK and Canada
Israel has double-taxation treaties with the United States, the United Kingdom and Canada. Rental income from Israeli property is taxable in Israel, with a foreign tax credit available at home (IRS Form 1116 for US taxpayers; HMRC foreign tax credit relief for UK residents).
For capital gains, tax is paid in Israel (Mas Shevach: 25% on the real gain for non-residents), with a foreign tax credit available in your home country. US persons must also report Israeli bank accounts (FBAR) and foreign assets (Form 8938/FATCA) — get cross-border advice before you sign.
Rental income taxation
Rental income offers several regimes to choose from: flat-rate taxation at 10% on gross income, or progressive scale (10-50%) with deduction of actual expenses. For a well-structured rental investment, the choice of tax regime is decisive.
VAT (Ma'am) on new builds
Israeli VAT (18%) is included in the sale price displayed by developers for new homes. The announced price is 'all inclusive' excluding Mas Rechisha and lawyer fees.
Arnona: local property tax
The Arnona varies considerably by city. In Tel Aviv: 80-120 ₪/sqm/year (about ₪7.40-11.15 per sq ft/year). In Beer-Sheva or Haifa: 30-50 ₪/sqm/year (about ₪2.80-4.65 per sq ft/year). See our budget simulator by city to compare.
Need personalized tax advice? Our English-speaking cross-border tax specialists support you. Free, no-obligation consultation.
Tax optimization: our recommendations
1. Structure your purchase: buying individually or through a company has very different implications.
2. Document your expenses: keep all invoices to maximize deductions.
3. Plan for capital gains: plan the holding period to benefit from allowances.
4. Declare at home: even if you pay tax in Israel, you must still report the property and any rental income in your home country (FBAR and Form 8938 for US persons; UK self-assessment for UK residents).
Frequently asked questions
What is Mas Rechisha?
Mas Rechisha (מס רכישה) is Israel's property purchase tax, the equivalent of transfer duties. It is calculated in progressive brackets on the purchase price and must be declared and paid within 60 days of signing.
Who is exempt from Mas Rechisha?
The partial exemption applies to the purchase of a single home (primary residence) by an Israeli resident: the first bracket, up to about 1.98 million shekels, is taxed at 0%. New immigrants (olim) also benefit from a specific allowance under certain conditions.
Does a non-resident pay more Mas Rechisha?
Yes. A non-resident buyer, like the purchase of a second property, is subject to the investor scale: 8% on the first bracket (up to about ₪6M) then 10% above that, with no exemption. The gap with the resident scale is therefore significant. (Temporary provision in force until January 15, 2028.)
When and how do you pay Mas Rechisha?
The tax must be declared online with the Israel Tax Authority within 60 days of the purchase deed, and paid within the same deadline. In practice, the buyer's lawyer handles it. Penalties and interest apply in case of delay.
Updated on October 9, 2026. Sources: Israel Tax Authority (scale in force until 15.1.2028), IsraelStart tax simulator.