Question 1

What is Mas Rechisha (purchase tax) in Israel and how much do you pay in 2026?

Accepted Answer

Mas Rechisha is Israel's property purchase tax. 2026 brackets (frozen at January 2024 levels through 2027): an Israeli first/sole home is graduated 0% up to ₪1,978,745, 3.5% to ₪2,347,040, 5% to ₪6,055,070, 8% to ₪20,183,565, 10% above. An additional or investment home pays 8% on the first ₪6,055,070 and 10% above (no 0% bracket). Foreign residents pay the same flat schedule as additional-home buyers — 8% / 10% — from the first shekel, with no graduated relief. As of May 2026; verify with a licensed Israeli tax attorney before signing.

Question 2

How does Mas Rechisha differ for foreign buyers, Israeli residents, and olim?

Accepted Answer

Foreign residents (non-residents) pay 8% on the first ₪6,055,070 and 10% above, from the first shekel — there is no graduated 0% bracket and no relief, regardless of whether the property is their only home. Israeli residents buying their sole apartment use the graduated brackets above. Olim chadashim get a separate purchase-tax discount track (typically 0% / 0.5% bands subject to an annually published ITA price ceiling) once per household over the lifetime of oleh status, available 1 year before to 7 years after the official aliyah date, for a residential sole-residence property below the eligibility threshold. The Aug 15, 2024 reform tightened residential / sole-residence requirements.

Question 3

What is the capital gains tax (Mas Shevach) when selling Israeli property?

Accepted Answer

Standard Mas Shevach is 25% on real (inflation-adjusted) gains. The sole-residence exemption requires Israeli tax residency, sole residence at sale, ≥18 months ownership, and a sale price below ₪5,008,000 — all four conditions cumulative. Foreign residents do NOT qualify for the sole-residence exemption and pay full 25% on any sale. A 2% capital surtax stacks above NIS 721,560 annual income, taking the effective rate to 27%. As of May 2026.

Question 4

Can foreign buyers and olim get an Israeli mortgage in 2026?

Accepted Answer

Yes, with different LTV ceilings under Bank of Israel rules. Israeli first/sole home: up to 75% LTV. Israeli replacement home: up to 70%. Investment / second home: up to 50%. Foreign resident: up to 50% (specialty lenders only — most banks do not extend to non-residents under standard products). Olim hadashim post-aliyah, treated as Israeli first home: up to 75%. The Bank of Israel policy rate is 4.00% (held March 30, 2026); Prime is 5.50% (BoI + 1.5% standard bank add-on). Payment-to-income capped at 50%, variable-rate portion capped at 67% of the loan.

Question 5

What VAT applies to property purchases in Israel?

Accepted Answer

VAT (Mas Erech Mussaf) on residential property is 18%, raised from 17% effective January 1, 2025 — not 2026. New-build property bought from a developer carries 18% VAT (passed through in the price). Resale (yad shnia) between individuals is VAT-exempt; only Mas Rechisha applies. The proposal to raise VAT to 19% in 2026 was rejected; the rate stays at 18%.

Question 6

What tax incentives apply to olim arriving in 2026?

Accepted Answer

Two distinct, stackable benefits. (1) Traditional 10-year foreign-source income exemption — still alive for all olim. (2) The new 'Encouraging Aliyah' incentive (Knesset Finance Committee approved March 18, 2026) for arrivals November 5, 2025 through end of 2026: a stepped 5-year discount on Israeli-source earned income — 0% in 2026 (cap NIS 600,000), 0% in 2027 (cap NIS 1,000,000), 10% in 2028 (cap NIS 1,000,000), 20% in 2029 (cap NIS 350,000), 30% in 2030 (cap NIS 150,000). Important: olim arriving on or after January 1, 2026 must report worldwide income, foreign assets, foreign trusts, and beneficial ownership to the Israel Tax Authority from year 1 under Amendment 272 — even when income remains tax-exempt. Pre-2026 olim are grandfathered. Confirm with a licensed Israeli tax attorney before relying on these benefits.

Question 7

How long does it take to buy property in Israel and what additional costs apply?

Accepted Answer

Property purchase in Israel typically takes 2–4 months: search and selection (2–6 weeks), contract signing with 10% deposit (1–2 weeks), financing and due diligence (4–8 weeks), and Tabu (Land Registry) registration (2–4 weeks). For foreign buyers, add 1–2 weeks for an Israeli ID number and bank account. Total acquisition costs typically run 5–12% above the property price: Mas Rechisha 0–10% (depending on buyer type), lawyer fees 0.5–1.5%, real-estate commission 2%, property valuation ₪2,000–5,000, Tabu registration ₪500–1,500, property insurance 0.1–0.3% annually. Israeli developer warranties (Sale of Apartments Law, 1973 + Amendment 9, 2022) include 1-year general and up to 6+ years on structural / piping / waterproofing, plus 7% escrow with five statutory securities.