Purchase Tax Update: New thresholds in January 2021

Every year, during the month of January, Israel Tax Authority publishes new thresholds for Mas Rechisha (Purchase Tax in Israel) according to the Central Bureau of Statistics Home Prices Index for the previous year.

The Mas Rechisha or Purchase Tax 2021 thresholds are updated annually, in mid-January, with consideration for the Home Prices Index of the previous year (published by the Central Bureau of Statistics). This generally translates into slightly lower taxes for home-buyers. In July, Finance Minister, Yisrael Katz announced a cut in purchase tax to encourage investment activity in the local real estate market during the Corona crisis. The updated levels this year are in line with that cut and continue to reflect a reduced rate for investors, including foreign residents, purchasing real estate in Israel.

Click here to use our Mas Rechisha Purchase Tax Calculator in English.

As of 16/01/2021, the new levels are as follows*:

Single Residential Home

Applicable when the property purchased is the only residential property owned in Israel. 

Up to 1,747,865 NIS of the purchase price0%
1,747,865 – 2,073,190 NIS of the purchase price3.5%
2,073,190 – 5,348,565 NIS of the purchase price5%
5,348,565 – 17,828,555 NIS of the purchase price8%
17,828,555 NIS and above10%

Additional Residential Home

Applicable when the individual owns more than one residential property in Israel. [Foreign-residents pay mas rechisha at the same rate as Israeli residents who own more than one home in Israel.]

Up to 1,294,770 NIS of the purchase price5%
1,294,770 – 3,884,295 NIS of the purchase price6%
3,884,295 – 5,348,565 NIS of the purchase price7%
5,348,565 – 17,828,555 NIS of the purchase price8%
17,828,555 NIS and above10%

New Olim

Applicable to new Olim within the first seven years of making Aliya.  

Up to 1,842,155 NIS of the purchase price 0.5%
1,842,155 NIS and above 5%

*Rates applicable from 16/01/2021 until 15/01/2022.

The contents of this article are designed to provide the reader with general information and not to serve as legal or other professional advice for a particular transaction. Readers are advised to obtain advice from qualified professionals prior to entering into any transaction.

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