How to Calculate Purchase Tax: A Simple Guide

Purchase tax is one of the biggest costs of buying a home, and many buyers find out about it too late. The good news: the calculation is simpler than it looks. In this guide I'll explain how it works, which brackets are in force today, and walk through one example from start to finish.

What purchase tax is, and who pays it

Purchase tax (mas rechisha) is paid by the buyer to the Israel Tax Authority when acquiring real estate rights, such as an apartment. The amount depends on two main things: the price, and whether this is your sole home or an additional home.

The principle: cumulative brackets

A common mistake is thinking that if the price "falls into" the 5% bracket, you pay 5% on the whole price. You don't. Each rate applies only to the part of the price inside that bracket, just like income tax. The first slice of the price is taxed at the first bracket's rate, the next slice at the second rate, and so on.

Brackets for a sole home

According to the Tax Authority, an Israeli-resident individual buying a sole residential apartment between 16 Jan 2025 and 15 Jan 2028 pays purchase tax at these rates. The amounts are frozen for the whole period, so they were not updated in January 2026 (Tax Authority instruction 1/2026):

Part of the price	Tax rate
Up to ILS 1,978,745	0%
ILS 1,978,745 – 2,347,040	3.5%
ILS 2,347,040 – 6,055,070	5%
ILS 6,055,070 – 20,183,565	8%
Above ILS 20,183,565	10%

The definition of a "sole home" has exceptions. For example, someone who owns up to a third of another apartment, or who sells their previous home within the period set by law, may qualify under certain conditions. A good lawyer can save you a lot of money here.

Brackets for an additional home

If you already own a home and buy another, for instance as an investment, tax is due from the first shekel (Tax Authority notice, 12 Oct 2026):

Part of the price	Tax rate
Up to ILS 6,055,070	8%
Above ILS 6,055,070	10%

These rates are a temporary order. It was set to run until 31 Dec 2026 and, after the Knesset dissolved, was extended to purchases made through 10 Feb 2027 (inclusive). Watch for updates if you plan to buy after that date.

Example: a sole home in Ashdod for ILS 2,400,000

Say you're buying your only home for ILS 2,400,000. Here's the calculation:

1. The part up to ILS 1,978,745: exempt, ILS 0.
2. The part between ILS 1,978,745 and 2,347,040: ILS 368,295 × 3.5% = ILS 12,890.
3. The part between ILS 2,347,040 and 2,400,000: ILS 52,960 × 5% = ILS 2,648.

Total purchase tax: about ILS 15,538. That's roughly 0.65% of the price, far less than most people imagine.

For comparison, if the very same apartment is bought as an additional home, the tax is 8% of the whole amount: ILS 192,000. That gap is exactly why it pays to check your status before you sign.

New immigrants

New immigrants (olim) get relief when buying a sole home, from one year before aliyah until seven years after. According to the Tax Authority: no tax up to ILS 1,978,745, 0.5% from there to ILS 6,055,070, and 8% from there to ILS 20,183,565. For an apartment worth more than ILS 20,183,565 the relief doesn't apply (instruction 1/2026). On the same ILS 2,400,000 apartment, an eligible oleh would pay about ILS 2,106.

Calculate it yourself

This site has a purchase-tax calculator based on these brackets. Enter the price, choose the purchase type, and get an estimate in seconds. You can share it on WhatsApp too. For an official check, the Tax Authority has its own simulator.

Worth remembering

• The calculator gives an estimate. The binding amount is the Tax Authority's assessment.
• For a joint purchase (for example by a couple), the calculation uses the deal value and the share each buyer acquires.
• Include purchase tax in your budget from the start, along with the other extra costs.
• In complex cases, such as inheritance, a replacement home or partial rights, get advice from a lawyer or tax adviser.

Want to talk it through? I'm Chaya Kraus of RE/MAX Together Ashdod. Message me on WhatsApp at 055-970-4745 and we'll go over it together, with no obligation.

This article is general information, not legal, tax or financial advice. Before any decision, consult a lawyer, tax adviser or mortgage adviser.