How much is the purchase tax on an apartment in Israel?

Purchase Tax on an Apartment — General Overview

Purchase tax is one of the most significant costs when buying an apartment in Israel. It is a state tax levied on the transfer of property rights, and payment is a legal obligation in every apartment purchase transaction. In recent years, various government ministries and political initiatives have attempted to ease this burden on buyers, particularly young people and residents of peripheral areas, but the basic structure of the tax has remained stable.

The cost of purchase tax on an apartment depends primarily on three main factors: (1) the purchase price of the property, (2) the type of property and its characteristics (first apartment, second apartment, investment), and (3) your personal status (eligibility for special discounts as a first-time buyer, new immigrant, or family member purchasing a shared apartment). All of these affect the final percentage of tax you will need to pay.

This guide details the purchase tax brackets, the percentages applicable at each price level, available legal discounts, and legal tips for reducing costs through lawful means. All information is based on the situation in 2026 and real estate laws currently in force in Israel.

Purchase Tax Brackets — Basic Structure

Purchase tax in Israel is a progressive tax, meaning the tax rate increases as the property price rises. You do not pay a single percentage on the entire purchase; instead, each "layer" of the price is subject to a different rate. This is similar to the structure of progressive income tax, but in the case of purchase tax, the brackets are slightly different and depend on the type of property and the buyer's status.

For example, if you are buying a first apartment worth ₪1,200,000, you will not pay a single percentage on the entire amount. Instead, the amount is divided into parts, and each part is subject to a different rate. The first part (up to a certain amount) may be at a lower rate, the second part at a higher rate, and so on.

• First apartment: Generally, lower rates apply, mainly to encourage young people and those with moderate income to purchase their first apartment.
• Second apartment or investment: Tax rates are higher, to encourage housing investment and limit real estate speculation.
• Third apartment and beyond: Rates are even higher, and in some cases additional taxes or purchase restrictions were imposed.

Purchase Tax Cost Table — First Apartment

Below is a table showing typical cost ranges for a first apartment in 2026. It is important to remember that this data is a general estimate, and in some cases (for example, low-income earners or new immigrants) additional discounts may be available:

Note: The table above is a general estimate only. The exact rates depend on the laws in force in 2026, the buyer's personal status, and various discount options. You should consult with a legal expert or accountant for an accurate calculation.

Legal Deductions on Purchase Tax — Who is Entitled?

Israeli law permits substantial deductions on purchase tax under certain circumstances. These deductions are designed to assist specific population groups in purchasing a home, particularly to encourage housing for young people, middle-income families, and new immigrants.

Deduction for First-Time Buyers (First Apartment)

A first-time buyer is entitled to a significant deduction on purchase tax. Typically, this deduction ranges between 50% to 75% of the standard tax, depending on certain conditions. To qualify for this deduction, the buyer must prove that this is their first apartment and that they do not own any other real estate property. This is a strict legal requirement, so all relevant documents must be preserved.

Deduction for New Immigrants

A new immigrant who purchased an apartment within 5 years of immigration to Israel is entitled to additional special deductions. Under certain circumstances, this deduction can reach 100%, meaning complete exemption from purchase tax. However, certain conditions apply: the apartment must be for personal use, and the purchase amount must not exceed a certain sum that is updated annually.

Deduction for Joint Purchase Among Family Members

In certain cases, when family members purchase an apartment together (for example, parents and children), they may be entitled to a deduction. This is a more complex situation and requires a case-by-case examination of the circumstances.

Deduction for Purchase in a Peripheral City

The Israeli government encourages purchasing in peripheral cities through purchase tax deductions. Typically, cities in the south, north, and east of the country are defined as peripheral. Buyers in these cities can receive an additional deduction on purchase tax, provided they meet other criteria (such as purchasing for personal use).

Additional Costs When Purchasing an Apartment

It is important to understand that purchase tax is only one part of the purchase costs. An apartment buyer should be aware of additional costs:

• Appreciation Tax: A tax on the profit made by the previous property owner. This does not directly affect the buyer, but it affects the final price of the apartment.
• Land Registry Registration Fees: The cost of formal registration of the property in the buyer's name at the registration office.
• Attorney Fees and Insurance: The cost of legal services and ownership insurance in case of accident (ownership insurance for purchase).
• Inspections and Drafts: Legal inspections of the property, agreements, and contracts.
• Real Estate Agent Commission (if applicable): Typically between 1.5% to 2.5% of the price.

In total, purchase costs (including purchase tax) can reach between 8% to 15% of the total property price.

Legal Tips for Reducing Purchase Tax Costs

If you are in the process of purchasing an apartment, there are several legal strategies that can help you reduce purchase tax costs. It is important to note that all of these must comply with the law, and each step should be taken with careful legal consideration.

1. Check Your Eligibility for Discounts

Before signing a purchase agreement, carefully check if you are entitled to any discounts. If this is your first apartment, you are entitled to a significant discount. If you are a new immigrant within 5 years of immigration, you may be eligible for an even larger discount. These discounts can save you tens of thousands of shekels.

2. Maintain Proof Documents

To prove eligibility for discounts, you will need documents such as a certificate of immigration (for a new immigrant), previous ownership certificates (to prove it is your first apartment), and forms from government offices. Keep all of these carefully, as without them you will not be able to claim a discount.

3. Consult with a Real Estate Attorney

Every apartment purchase is unique, and you may have special circumstances that allow for a discount or another legal way to save. A real estate attorney can review your situation in detail and offer legal solutions that suit your needs.

4. Plan the Transaction at the Right Time

In some cases, the timing of a transaction can affect the tax rate. For example, if there is a temporary government program for purchase tax discounts, it is advisable to check the dates of this program and complete the purchase within the permitted period.

5. Do Not Attempt to Evade Tax Illegally

We emphasize strongly: you cannot and should not attempt to evade purchase tax through illegal means, such as declaring an artificially low price or conducting false transactions. This constitutes legal fraud, and it can lead to severe penalties, including substantial fines, transaction reversal, and legal prosecution. The Income Tax Authority closely monitors real estate transactions, and it is simply not worth the risk.

Process Steps — From Purchase Tax Calculation to Payment

When you purchase an apartment, the process of calculating and paying purchase tax begins at the stage of signing a purchase agreement. Below is an overview of the steps:

1. Signing the Purchase Agreement: An attorney will prepare a purchase agreement that details the conditions of purchase, including the price, transfer date, and any other conditions. The agreement will also indicate the estimated amount of purchase tax.
2. Checking Eligibility for Discounts: An attorney will check if you are eligible for discounts and will prepare all necessary documents (certificates, declarations, etc.).
3. Calculating Purchase Tax: Based on the price, type of property, and your personal status, the exact amount of purchase tax will be calculated. If you are eligible for a discount, it will be deducted from the amount.
4. Depositing Funds in a Trust Account: The buyer deposits all funds (purchase price + purchase tax + additional costs) in an attorney's trust account to ensure the funds are safe.
5. Filing an Application for Registration in the Land Registry: An attorney files an application to register the property in the buyer's name at the Land Registry. This application includes a declaration of purchase tax and its payment.
6. Payment of Purchase Tax: Purchase tax is paid to the tax authorities (usually through an attorney or through the Land Registry) before the registration in the Land Registry is final.
7. Receipt of Title Deed: After all conditions are met and purchase tax is paid, the Land Registry issues an official title deed in the buyer's name.

Each step in this process is important, and every detail must be carefully reviewed. This is why working with a real estate attorney is essential when purchasing an apartment.

Why It's Important to Consult with a Real Estate Attorney

Purchasing an apartment is one of the largest investments in people's lives, and it involves many legal, financial, and bureaucratic details. A real estate attorney can assist you at every stage of the process, from checking your eligibility for discounts to signing a purchase agreement and registering the property at the Land Registry.

A real estate attorney can:

• Review your situation and identify discounts you are entitled to.
• Calculate the purchase tax cost accurately, taking into account all applicable legal discounts.
• Prepare complete and legally compliant purchase agreements.
• Examine the property from a legal perspective, including checking for mortgages, liens, debts, and other rights.
• Accompany you through the Land Registry registration process and ensure everything is carried out properly.
• Represent you if there is a dispute or issue in the purchase process.

Mandelbaum, Gor, Witzman-Gor & Co. specializes in real estate law and real estate transactions since 2008. We offer personalized and dedicated legal advice, and a first consultation at no cost. If you are in the process of buying an apartment or have questions about purchase tax, we are here to help you.

Summary — What You Need to Remember About Purchase Tax

Purchase tax on an apartment is a significant part of the purchase costs, but it can be reduced through lawful means. The key points to remember:

1. Purchase tax is graduated: Each price range is subject to a different rate, and you do not pay a uniform percentage on the entire purchase.
2. Lawful discounts exist: First-time buyers, new immigrants, and buyers in peripheral areas are entitled to substantial discounts.
3. Check your eligibility: Before signing a contract, check if you are eligible for discounts, as this can save you thousands of shekels.
4. Present supporting documents: To claim a discount, you must present documents such as an immigration certificate, a written declaration, and forms from government offices.
5. Do not attempt to evade the tax: This constitutes tax fraud, and it can lead to severe penalties.
6. Consult with an attorney: A real estate attorney can help you understand all legal aspects of the purchase and save you money through lawful means.

Purchasing an apartment is a complex process, but with proper legal guidance, you can ensure the transaction is conducted properly and at a fair price. Mandelbaum, Gor, Witzman-Gor & Co. Real Estate Law is here to help you at every step of the way.