Mas Rechisha: Israel's Real Estate Purchase Tax Explained

What Is the Mas Rechisha?

The Mas Rechisha (מס רכישה) is Israel's property acquisition tax. It is paid by the buyer at the time of the transaction. Think of it as a transfer tax or stamp duty.

Rate for Israeli Residents (First Home)

The scale is progressive:

• Up to 1,978,745 ILS: 0%
• From 1,978,745 to 2,347,040 ILS: 3.5%
• From 2,347,040 to 6,055,070 ILS: 5%
• From 6,055,070 to 20,183,565 ILS: 8%
• Above: 10%

These thresholds are updated annually.

Rate for Non-Residents and Investors

If you're buying a second home or are not an Israeli resident, the scale is very different and much less favorable:

• Up to 6,055,070 ILS: 8%
• Above: 10%

Key point: Foreign nationals who are not Israeli residents pay the "investor" rate even for their first purchase in Israel.

The Olim Hadashim Exception

Olim hadashim (new immigrants) benefit from a reduced rate during the first 7 years following their aliyah:

• Up to 1,978,745 ILS: 0.5%
• Above: 5%

This is a considerable tax advantage that can represent tens of thousands of shekels in savings.

Practical Calculation

For an apartment at 3,500,000 ILS purchased by a non-resident:

• 3,500,000 × 8% = 280,000 ILS (approximately $75,000)

For an Israeli resident (first home):

• Total: approximately 70,538 ILS (approximately $19,000)

The gap is enormous. This is why many foreign buyers consider making aliyah before purchasing.

Other Costs to Anticipate

In addition to Mas Rechisha, budget for:

• Attorney fees: 0.5% to 1.5% of the price
• Real estate agency: 2% + VAT (sometimes split buyer/seller)
• Moving and furnishing costs

How to Reduce the Tax Bill?

1. Make aliyah before buying if you plan to settle in Israel

2. Time your purchase carefully — if you're in the process of aliyah, the date of first purchase within 7 years is critical

3. Consult a specialist in Franco-Israeli or Anglo-Israeli tax matters

RelayState can connect you with tax specialists experienced in international Israeli real estate transactions.