Ascend Israel Properties
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Ascend Israel Properties
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Mas Rechisha is Israel’s real estate purchase tax. Foreign buyers pay 8 percent on the property value up to ₪6,055,070 and 10 percent above, due within 60 days of signing. Israeli residents on a first home start at 0 percent through ₪1,978,745. Olim Hadashim purchasing within seven years of Aliyah qualify for reduced brackets. Brackets are frozen through end of 2027 under the January 2025 Temporary Order.
Every foreign buyer of Israeli property pays Mas Rechisha. Most do not understand it before signing. This is the framework, the brackets, the timing, and the mistakes - written by a US-licensed real estate attorney with an Israeli law degree.
Mas Rechisha (Hebrew: מס רכישה, literally “acquisition tax”) is the purchase tax levied on every Israeli real estate transaction. It is the closest equivalent to stamp duty in the UK, transfer tax in the US, or droits de mutation in France, but with two distinctive features that catch foreign buyers off guard.
First, the bracket structure is dramatically different for residents and non-residents. An Israeli citizen buying a first home pays zero tax on the first ₪1,978,745. A non-resident foreign buyer pays 8 percent starting at the first shekel. That single distinction means a foreign buyer of a ₪3 million Tel Aviv apartment owes roughly ₪240,000 in Mas Rechisha, while an Israeli resident purchasing the same apartment as a first home owes approximately ₪79,000.
Second, the tax is due within 60 days of signing the purchase contract, not at closing or delivery. For off-plan purchases where delivery is three to five years away, the buyer must still file and pay Mas Rechisha within 60 days of signature. This timing trap accounts for a substantial fraction of the late-filing penalties levied against foreign buyers each year.
Under the January 2025 Temporary Order (Horaat Shaa), all Mas Rechisha brackets are frozen at the values below through the end of 2027. The Israeli Tax Authority adjusts brackets annually for inflation in ordinary years; the current freeze is a deliberate policy intervention to support foreign investment and address housing-market dislocations from the 2023-2024 period.
| Buyer Category | Property Price Bracket | Mas Rechisha Rate |
|---|---|---|
| Israeli Resident, First Home | ₪0 to ₪1,978,745 | 0 percent |
| ₪1,978,746 to ₪2,347,040 | 3.5 percent | |
| ₪2,347,041 to ₪6,055,070 | 5 percent | |
| ₪6,055,071 to ₪20,183,565 | 8 percent | |
| Above ₪20,183,565 | 10 percent | |
| Israeli Resident, Investment / Second Home | Up to ₪6,055,070 | 8 percent |
| Above ₪6,055,070 | 10 percent | |
| Foreign Buyer (Non-Resident) | Up to ₪6,055,070 | 8 percent |
| Above ₪6,055,070 | 10 percent | |
| Olim Hadashim, First Home Within 7 Years of Aliyah | Up to reduced threshold | 0.5 percent |
| Above the threshold | 5 percent |
Brackets are progressive, not cliff-edge. The 10 percent rate applies only to the portion above the threshold, not to the entire purchase price. This is the same logic as US federal income tax brackets, and it is the single calculation foreign buyers most often misunderstand.
| Property price | ₪4,000,000 |
| Bracket: 8 percent on full amount (under ₪6,055,070) | 8 percent × ₪4,000,000 |
| Mas Rechisha owed | ₪320,000 |
At a 3.65 NIS-to-USD rate, that is approximately USD 87,700 in purchase tax. Add expected closing costs of 1.5 to 2 percent (legal, agent, Tabu registration) and the buyer’s total transaction cost lands at roughly USD 99,000 on the ₪4 million apartment.
| Property price | ₪10,000,000 |
| Bracket 1: 8 percent on first ₪6,055,070 | ₪484,406 |
| Bracket 2: 10 percent on the remaining ₪3,944,930 | ₪394,493 |
| Mas Rechisha owed | ₪878,899 |
Roughly USD 241,000. The effective tax rate at this price point is 8.79 percent of the purchase, not 10 percent, because only the portion above the threshold is taxed at the higher bracket.
| Property price | ₪3,500,000 |
| Bracket 1: 0.5 percent on first ₪1,978,745 (approximate) | ₪9,894 |
| Bracket 2: 5 percent on remaining ₪1,521,255 | ₪76,063 |
| Mas Rechisha owed (Olim track) | ₪85,957 |
If the same buyer purchased the same apartment as a foreign non-resident instead of as an Oleh, they would owe ₪280,000 (8 percent of ₪3,500,000). Aliyah timing produces approximately ₪194,000 in savings on this specific purchase - reason enough to coordinate the property purchase with the Aliyah timeline for buyers genuinely making the move.
The single most common foreign-buyer mistake is missing the 60-day filing window. The clock starts at contract signature, not at handover of keys or at the final wire transfer. For off-plan purchases where delivery is years away, the tax still must be filed in 60 days. The Israeli Tax Authority issues a binding self-assessment form (the shuma atzmit) that must be filed online or in person.
Late filing produces three categories of cost: linkage to the Israeli consumer price index (Madad) from day 61 forward, interest at the rate set by Israeli law (currently around 4 percent annually), and civil fines that can escalate quickly if the delay extends past six months. For an ₪8 million purchase, a six-month filing delay can produce roughly ₪30,000 to ₪50,000 in linkage, interest, and fines, all avoidable.
Foreign buyers frequently conflate Mas Rechisha with VAT (Mas Erech Musaf). They are entirely separate taxes with different applicability, different rates, and different filing mechanics.
| Mas Rechisha | VAT (Mas Erech Musaf) | |
|---|---|---|
| What it taxes | Real estate transfers (purchase tax) | Value added on goods and services |
| Current rate | 0 to 10 percent (bracket-progressive) | 18 percent (flat) |
| Applies to | All real estate transfers | New construction only; not resale |
| Who pays | Buyer | Buyer (embedded in listed price) |
| When due | 60 days after signing | Embedded in the price paid to the developer |
| Olim relief | Reduced brackets within 7 years of Aliyah | No general olim VAT exemption (narrow carve-outs exist case by case) |
On a new-construction apartment listed at ₪5 million, the developer’s ₪5 million quoted price already includes the 18 percent VAT. The Mas Rechisha is calculated on the same ₪5 million and paid separately by the buyer to the Israeli Tax Authority. The two taxes are additive on new construction; only Mas Rechisha applies on resale.
One of the most under-used features of Israeli real estate tax law is Section 62 of the Real Estate Tax Law (Sefer HaChukim), which provides preferential rates for lifetime transfers between defined close family members: spouse, child, grandchild, parent, grandparent, or sibling.
Under Section 62, the giver is fully exempt from Mas Shevach (capital gains tax). The recipient pays Mas Rechisha at one-third of the rate that would otherwise apply to them. For a child who would otherwise pay the foreign-buyer 8 percent rate, the Section 62 transfer drops their Mas Rechisha to approximately 2.67 percent. On a ₪3 million transfer, that is the difference between ₪240,000 and ₪80,000 in tax, a ₪160,000 saving available simply by structuring the transfer correctly during the giver’s lifetime rather than at death.
Section 62 is most useful for families intending long-term holds where the giver is comfortable transferring legal control during their lifetime. The recipient inherits the giver’s tax basis, so embedded gain is deferred rather than eliminated. Discussing Section 62 before signing the purchase contract, rather than years later, is the highest-leverage tax planning available to multi-generational diaspora families.
From the inside of dozens of foreign-buyer transactions a year, the following errors recur with high frequency:
The brackets and timing rules above produce a deterministic calculation for any specific purchase. For a precise figure including closing costs, VAT (where applicable), attorney fees, and agent commission, the cleanest tool is the Ascend Israel Purchase Tax Calculator, which incorporates the current 2025-2027 frozen brackets for every buyer category and outputs results in NIS, USD, and EUR.
The calculator handles foreign-buyer, investor, resident-first-home, and Olim Hadashim brackets, plus VAT toggle for new construction. Use it to estimate your total transaction cost before committing to a purchase contract, or before pricing a project page in your shortlist.
Free, instant, current 2026 brackets. Foreign buyer, investor, resident, or Olim, all four tracks supported, with VAT and closing-cost breakdown in NIS, USD, and EUR.
Open Calculator →Several other Israeli taxes apply at different points of the real estate lifecycle and are sometimes confused with Mas Rechisha. Brief disambiguations:
Non-resident foreign buyers pay Mas Rechisha at 8 percent on the property value up to ₪6,055,070, and 10 percent on the portion above that threshold. These brackets are frozen through end of 2027 by the January 2025 Temporary Order. Tax is due within 60 days of signing.
New immigrants who purchase their first Israeli home within seven years of Aliyah qualify for significantly reduced Mas Rechisha brackets, approximately 0.5 percent on the lower bracket and 5 percent above. The relief is conditional on personal occupation criteria and the exact thresholds are revisited annually. Always verify current Olim thresholds with Israeli counsel before relying on them.
Within 60 days of signing the purchase contract. Applies equally to off-plan and resale, even though off-plan delivery is years later, the tax is filed and paid in the 60-day window after signature. Late filing triggers linkage to the Madad, interest, and potential fines.
No. Mas Rechisha is the purchase tax on every real estate transfer. VAT (18 percent) applies only to new construction and is embedded in the developer’s listed price. Resale homes do not carry VAT. The two taxes are separate and additive on a new-construction purchase.
Zero percent on the first ₪1,978,745, then 3.5, 5, 8, and 10 percent in progressive brackets up to ₪20,183,565 and above. The 0 percent on the lower bracket is the structural benefit residents have that non-residents do not.
Yes. Section 62 of the Real Estate Tax Law allows lifetime transfers between close family members at preferential rates: the recipient pays one-third of the standard Mas Rechisha rate. For a transfer to a child who would otherwise pay 8 percent, this drops to approximately 2.67 percent. The giver is exempt from Mas Shevach (capital gains) under the same section.
Mas Rechisha is calculated on the full purchase price, not the cash portion. Financing structure does not change the tax base. Attempts to under-report the purchase price are illegal and trigger reassessment by the Israeli Tax Authority.
Brackets apply as of the contract signing date, not the filing date. Brackets are indexed annually in ordinary years but currently frozen through end of 2027 under the January 2025 Temporary Order.
This article is general informational content about Israeli real estate purchase tax. It is not legal or tax advice for any specific transaction. Mas Rechisha brackets, eligibility for Olim Hadashim relief, and the applicability of Section 62 to a particular transfer all require verification against current Israeli Tax Authority guidance and the specific facts of your purchase. Before signing a purchase contract, retain Israeli counsel admitted to the Israel Bar and confirm your specific tax exposure. Netanel Hershtik is admitted to the New York State Bar and holds an LLB in Israeli law; he is not a substitute for transactional Israeli counsel on a specific deal.