< Back

Purchase Tax in Israel for Foreign Residents

Q: Can I pay purchase tax from a foreign bank account?

Yes, payment can be arranged through your lawyer or the online system, but allow time for the transfer so the deadline is met.

Q: Is purchase tax refundable if the deal falls through?

If a sale is cancelled, the Real Estate Taxation Law allows the tax authority to cancel the assessment and refund the tax, subject to showing that the cancellation is genuine. Your lawyer files the application.

Q: Does the tax depend on my nationality?

No. It depends on whether you are an Israeli resident for tax purposes, which is about where you live, not your passport.

Calculator and tax form on a wooden table

Purchase tax (mas rechisha) is a tax paid by the buyer of rights in Israeli real estate under the Real Estate Taxation Law 5723-1963. The buyer must declare the purchase to the Israel Tax Authority within a deadline counted from the signing date, and pay the tax within the time the law allows. For a foreign resident the key point is not the mechanics, which are the same as for Israelis, but the bracket: the reduced brackets that Israeli residents enjoy for a single apartment are, as a rule, not available to a non-resident. We do not quote rates here because they change; your lawyer or the Israel Tax Authority will give you the current table.

What is taxed and who pays

The tax applies to the acquisition of a right in real estate: ownership, a long lease, or rights under a contract to acquire them.
The buyer pays. The seller pays a separate tax, land appreciation tax, covered in our guide on selling.
The tax base is the price, unless the tax authority finds that it does not reflect market value; a price well below market invites a reassessment.
Residential apartments and other real estate have different bracket tables.

Why residency matters

The Real Estate Taxation Law gives lower brackets to an Israeli resident buying a 'single apartment', meaning the buyer's only residential apartment in Israel at the time of purchase, subject to conditions. A buyer who is not an Israeli resident is treated as buying an additional apartment even if it is their only property anywhere, so the higher brackets apply. Residency is tested by reference to the Income Tax Ordinance's definition of an Israeli resident, which looks at where your centre of life is, with days spent in Israel as one of the indicators.

The law contains relief for someone who becomes an Israeli resident within a period after the purchase; if that applies, the tax can be recalculated on the single-apartment brackets and the difference refunded. The law also contains a separate relief for new immigrants (olim). Both have conditions and time limits that you should check with your lawyer before relying on them.

Reporting and paying from abroad

The declaration is filed online by your lawyer under your power of attorney within a fixed number of days from the signing date, currently 30 days; confirm the current figure with your lawyer.
The declaration includes a self-assessment of the tax. The tax authority may accept it or issue its own assessment.
Payment is made through the tax authority's online system or at a bank; late payment carries linkage differences and interest.
A tax file is opened in your name on the first declaration, and your passport number serves as the identifier.
Keep the receipt: the Land Registry will not register you as owner without a purchase tax clearance certificate.

Buying from a developer

In a developer sale the tax is calculated on the full contractual price, including the amounts that will be paid during construction, and the deadline still runs from the contract date even though you will not receive the apartment for years. Ask your lawyer how later changes to the price, such as index linkage of instalments or extras you order, are treated for tax.

Planning ahead

Budget for the tax on the higher brackets and treat any relief as a bonus.
If you plan to move to Israel, tell your lawyer before signing, because timing can affect which brackets apply.
If a spouse or partner buys with you, the law generally treats spouses and their minor children as a single buyer for the single-apartment test; discuss the structure.
Buying through a company does not reduce purchase tax and brings other tax consequences.

Common mistakes

Assuming the single-apartment brackets apply because this is your only apartment in Israel.
Missing the declaration deadline because the power of attorney arrived late.
Reporting a price that excludes the parking space or storage sold in the same deal.
Forgetting that a memorandum of agreement can start the clock.
Paying the tax late and losing the clearance needed to register.

FAQ

Can I pay purchase tax from a foreign bank account?