The Israel Real Estate Purchase Tax Law requires the purchaser of property, and real estate in Israel to pay a Purchase Tax.
The Purchase Tax aka Mas Rechisha is based on the price of the property at the time the purchase is made. In some cases mostly when there are multiple assets other parameters need to be evaluated to minimize the Mas Rechisha or do conduct tax planning.
There are different rates of Purchase Tax depending on the purchaser’s citizenship/residence situation at the time of the purchase. There are different rates for Israeli citizens, new immigrants (“Olim”), and foreign residents.
These are the different rates of Israeli Purchase Tax when purchasing what is defined as a “sole residence” under Israeli Real Estate Tax law. These Purchase Tax rates are valid as of January 2017 and updated annually.
Purchase Tax Rates for Residents of Israel:
- Up to NIS 1,623,320: 0%
- From NIS 1,623,320 to NIS 1,925,460: 3.5%
- From NIS 1,925,460 to NIS 4,967,445: 5%
- From NIS 4,967,445 to NIS 16,558,150: 8%
- Over NIS 16,558,150: 10%
Purchase Tax Rates for New Immigrants ‘Olim’ to Israel:
- Up to NIS 1,759,310: 0.5%
- Over NIS 1,759,310: 5%
Purchase Tax Rates for Foreign Residents:
- Up to NIS 4,967,445: 8%
- Over NIS 4,967,445: 10%
Note: These Purchase Tax rates for Foreign Residents also apply to those individuals who purchase apartments that are not “sole residences” as defined by Israeli Real Estate Tax law.
| Purchase Amount | Residents | New Immigrants (Olim) | Foreign Residents |
|---|---|---|---|
| Up to ₪1,623,320.00 | 0% | 0.50% | 8.00% |
| Up to ₪1,925,460.00 | 3.50% | 0.50% | 8.00% |
| Up to ₪4,967,445.00 | 5.00% | 0.50% | 8.00% |
| Up to ₪16,558,150.00 | 8.00% | 0.50% | 10.00% |
| Over ₪ | 10.00% | 0.50% | 10.00% |
Table Explanation:
- ₪ – (NIS – New Israeli Shekel)
- For residents – If their purchase amount is more than ₪16,558,150, they will be taxed at 10% for the entire amount.
- For new immigrants and foreign residents – After the initial bracket, they pay only the top rate, regardless of how high their purchase price is.
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