Israel Property Taxes Explained — A Plain-English Breakdown
Purchase tax, capital-gains tax, municipal tax (arnona), betterment levy — the four taxes that touch almost every Israeli property deal, each explained in one paragraph.
Most first-time buyers think about the sticker price. In reality, the tax bundle can add up to 10% of the deal. Here's the complete rundown — in human language.
Purchase tax (mas rechisha)
Paid by the buyer. Brackets differ between "first home" and "second-plus home." As of 2026, first-home purchases under ₪1.978M are exempt; above that, 3.5% on the first bracket. Second homes are taxed 8% from the first shekel up to ₪6M, 10% above that.
Capital-gains tax (mas shevach)
Paid by the seller. 25% of the nominal gain (sale price minus purchase price, inflation-adjusted). Generous exemptions exist for a first home held at least 18 months.
Municipal tax (arnona)
Monthly payment to the city. In Tel Aviv: roughly ₪60–₪90 per m² per year. In Haifa: ₪40–₪65. Discounts exist for certain populations (soldiers, students, displaced residents). Always verify the rate before you sign.
Betterment levy (heitel hashbacha)
Paid on sale if a zoning plan has increased the parcel's building rights. 50% of the betterment. Especially relevant for TAMA 38 renovations and older properties.
Secondary taxes people forget
- VAT — applies to brand-new developer apartments (18%), not to second-hand.
- Rental income tax — applies when rent exceeds ~₪5,654 / month.
- Surtax (mas yesef) — an additional 3% on annual income above ~₪721,560.
Pro tip: ask the seller for the latest appraisal report on the property. It can surface a potential betterment levy that you'd otherwise only discover in your own appraisal.
Not sure how much your move will cost? Start with a listings search — every card surfaces the median ₪/m² in the area, which helps build a realistic budget.
