Real Estate Taxes in Israel, 2026 - דורון אהרוני, משרד עורכי דין

What is the structure of real estate taxes in Israel?

Real estate taxation in Israel is vital for property owners, investors, and potential buyers and sellers to understand due to its complexity and regular amendments.

Since 1 January 2014 (Amendment 76), owners of more than one residential apartment – including many foreign residents – generally pay land appreciation tax when they sell, and buyers of additional apartments pay higher purchase tax. Purchase tax brackets are currently frozen at their 2025 levels until 15 January 2028.

This article will discuss the changes in the purchase and land appreciation taxes, who it affects, and how advance tax planning can help.

Purchase Tax in Israel

Purchase tax is a progressive tax that increases based on the property's value, with rates ranging from 0% to 10%. The purchaser of the property is obligated to pay the purchase tax.

Purchase tax rates depend on the buyer’s status:

1. Israeli resident buying their only residential apartment

2. Israeli resident buying an additional apartment

3. Foreign resident

4. New immigrant (oleh) buying their only apartment within the eligibility period (from one year before to seven years after aliyah)

For purchase tax purposes, a buyer is generally treated as buying a single apartment even if they own a share of up to one-third in another residential apartment (or up to one-half of an inherited apartment). A larger share in another apartment means the purchase is taxed at the rates for an additional apartment.

Estimated Purchase Tax Bracket – 2026

Purchaser	Property Value (NIS)	As of 2026
Israeli resident single home owner;	0 to 1,978,745 1,978,745 to 2,347,040 2,347,040 to 6,055,070 6,055,070 to 20,183,565 Above 20,183,565	0% 3.5% 5% 8% 10%
Israeli resident multiple home owner; non-Israeli resident owner	0 to 6,055,070 Above 6,055,070	8% 10%
New immigrant (oleh), only apartment	0 to 1,978,745 1,978,745 to 6,055,070 6,055,070 to 20,183,565 Above 20,183,565	0% 0.5% 8% Benefit does not apply – regular single-apartment rates on the full price

The new immigrant rates are set by Regulation 12A of the Purchase Tax Regulations, which applies to purchases from 15 August 2024 and is granted once, for an only (or replacement) apartment. If the price exceeds NIS 20,183,565, Regulation 12A does not apply at all and the entire price is taxed at the regular single-apartment rates. An oleh who immigrated before 15 August 2024 may instead elect the former Regulation 12 track (0.5% up to NIS 1,988,090 and 5% above it, with no price cap, also for an apartment that is not the buyer's only one), which can be cheaper for apartments above roughly NIS 12.5 million. The Israel Tax Authority's purchase tax simulator lists the two tracks as separate calculation types. Regulation 12 also covers an oleh's purchase of a business property.

Figures are subject to change according to accommodations stipulated in the law; consult a real estate lawyer to ensure accurate tax rate.

Land Appreciation Tax in Israel – 2026

The seller is obligated to pay the land appreciation tax, which refers to the capital gain of residential property ownership. Before 1 January 2014, Section 49B(1) allowed an exemption on the sale of a residential apartment once every four years, regardless of how many apartments the seller owned. Amendment 76 repealed this exemption from 1 January 2014; the single-apartment exemption under Section 49B(2) remains, with the conditions described below.

Amendment 76 to the Real Estate Taxation Law, in force since 1 January 2014, repealed Section 49B(1) and amended Section 49B(2), including a ceiling on the exempt sale price that mainly affects high-value apartments. Current rules (2026):

Section 49B(2)

1. The exemption applies in full up to a sale price of NIS 5,008,000 (amount frozen through 2027). If the price is higher, the part of the gain attributable to the excess is taxable.

1. A foreign resident can qualify for the single-apartment exemption only if they do not own a residential apartment in their country of residence. They are presumed to own one unless they provide a certificate from that country’s tax authority (in some cases alternative proof is accepted).

1. An Israeli resident selling their only residential apartment may claim the exemption, provided they have owned it for at least 18 months from the date it became a residential apartment (for a new apartment, usually the date of the occupancy permit, "Form 4"), and have not sold another apartment under this exemption in the preceding 18 months.

1. A seller may still qualify for the single-apartment exemption if, in addition to the apartment being sold, they own a share of up to one-third in another residential apartment (or up to one-half of an inherited apartment).

A share of up to one-half in an inherited apartment does not prevent the seller from claiming the single-apartment exemption on their own apartment. An inherited apartment may itself be sold with an exemption under Section 49B(5), subject to conditions relating to the deceased.

Section 48A(b2) – Linear Relief for Apartments Acquired Before 2014

If you sell a residential apartment acquired before 1 January 2014 and the sale is not fully exempt, the gain is generally divided over the ownership period on a linear basis: the portion attributable to the period up to 31 December 2013 is exempt, and the portion from 1 January 2014 onward is taxed (generally at 25%). Foreign residents may also use this linear calculation.

Within the transitional period the land appreciation taxes will be calculated by dividing the capital gain value of the property at the point of sale by the number of years the property was owned, thereby subtracting the capital gain prior to January 01, 2014, and taxing only the capital gain commencing from January 01, 2014 to the date of sale; the portion of the gain attributed to the period before 1 January 2014 is exempt. Because that exempt portion shrinks as time passes, the timing of a sale can affect the tax.

How are real estate taxes for foreigners (Non-Israeli) different?

Foreigners should be wary of potential double taxation. Although Israel has treaties to prevent this with many nations, understanding the implications both in Israel and one's home country is crucial.

Foreigners buying or selling property in Israel are subject to Israeli real estate taxes. While similar to resident tax structures, there are nuances:

Purchase tax: Foreign residents pay the rates for an additional apartment (8% up to NIS 6,055,070 and 10% above), even if it is their only apartment in Israel.
Land appreciation tax: Generally 25% of the real (inflation-adjusted) gain – the sale price minus the purchase price and deductible expenses.
Arnona: This municipal tax applies to everyone, irrespective of residency.

How can I minimize my real estate tax liability in Israel?

Efficient planning and understanding the nuances of the tax code can help. This includes:

Utilizing tax breaks and exemptions
Accurately reporting deductible expenses
Considering the timing of buying/selling properties
Consulting a real estate tax lawyer for advice tailored to your situation

Our office handles real estate taxation and tax planning, and represents clients in real estate transactions – sales and purchases of second-hand and new (developer) apartments – and in transfers of apartments between family members without consideration.

Additionally, the office deals with inheritance laws, such as the drafting of wills, mutual wills, prenuptial agreements, estate division agreements, and enduring power of attorney.

Kfar Sava offices: 42 Sheshet Hayamim St., Kfar Sava 44269

Tel: 972-9-7429382 Fax: 972-9-7429534

Tel Aviv offices: Museum Tower, 4 Berkowitz St., Tel Aviv 64238

Tel: 972-3-6421088 Fax: 972-3-9400125