Understanding Tel Aviv property tax and other real estate taxes is one of the most important steps when buying, selling, or investing in Israel. The system can seem complicated at first, especially for foreigners, but once you know the main taxes and how they’re applied, it becomes much more manageable.
At Ronkin Real Estate, we guide clients through every part of the process — from identifying the right property to connecting you with trusted local lawyers and tax professionals who specialize in Tel Aviv real estate. This 2026 guide breaks down every tax you should know and how to plan ahead.
Israel Real Estate Taxes at a Glance
| Tax | Who Pays | Rate |
|---|---|---|
| Purchase Tax (Mas Rechisha) | Buyer | 0%–10% depending on status |
| Capital Gains Tax (Mas Shevach) | Seller | 25% (exemptions apply) |
| Arnona (Property Tax) | Owner or tenant | ₪85–₪150/sqm annually |
| Rental Income Tax | Landlord | 0%, 10% flat, or marginal |
| Betterment Levy (Hetel Hashbacha) | Seller | Up to 50% of uplift |
| VAT | Buyer (new builds) | 18% |
Purchase Tax (Mas Rechisha)
Every property purchase in Israel involves a one-time purchase tax paid by the buyer. Rates depend on the property’s value and the buyer’s status. Israeli residents buying their first home enjoy tiered exemptions, while foreign buyers pay from the first shekel.
For 2026, the thresholds were slightly updated for inflation:
- Israeli residents pay 0% up to roughly ₪2 million, then 5%–10% on the amount above that threshold
- Foreign buyers generally pay between 8% and 10% depending on the property’s value
- New immigrants (olim hadashim) may qualify for reduced rates or exemptions on their first purchase
- Investors buying a second property in Israel pay higher rates regardless of nationality
Purchase tax is paid directly to the Israeli Tax Authority (Mas Hachnasa) within 60 days of signing the purchase agreement. Your lawyer handles this as part of the closing process.
For a full walkthrough of the buying process including how purchase tax fits in, see our complete guide to buying property in Israel. If you’re purchasing as an overseas buyer, our guide to buying property in Israel as a foreigner covers all the current rules and benefits.
Capital Gains Tax (Mas Shevach)
When you sell a property for more than you paid, capital gains tax applies to the profit. The standard rate is 25%, calculated after deducting legitimate expenses such as:
- Legal fees and notary costs
- Real estate agency fees
- Renovation and improvement costs (with receipts)
- Mortgage arrangement fees
- Inflation adjustment (linked to the Consumer Price Index)
Israeli residents selling their primary home may qualify for a full exemption if they haven’t sold another property within the past four years and have lived in the property as their main residence. Foreign owners can sometimes qualify for partial benefits too, particularly when a tax treaty between Israel and their home country applies.
If you’re planning to sell, read our guide to selling property in Israel for a full breakdown of the selling process. For long-term investment planning and how these exemptions factor in, see our real estate investment guide.
Property Tax (Arnona)
Arnona is the annual municipal property tax charged by the Tel Aviv Municipality, based on the apartment’s size, location, and use. Rates, billing, and available discounts vary by neighborhood — see our full Arnona Tel Aviv guide for current 2026 figures and exemptions.
Rates vary significantly by neighborhood. Central areas like Neve Tzedek, Old North, and the beachfront tend to be higher than outlying districts. You can explore properties by area in our Tel Aviv neighborhoods guide.
Betterment Levy (Hetel Hashbacha)
This is a tax that many buyers and sellers don’t know about until it’s too late. When a local planning committee approves changes that increase a property’s value — such as rezoning, adding building rights, or new infrastructure — the municipality can charge a betterment levy of up to 50% of the uplift in value.
This most commonly arises with:
- TAMA 38 urban renewal projects, where existing units often receive additional building rights
- Rezoning of commercial land to residential
- Approval of additional floors on an existing building
The levy is paid by the property owner at the time of the approval or at the time of sale. If you’re buying a property that has recently received planning benefits, make sure your lawyer checks for any outstanding betterment levy before signing. For context on urban renewal and how it affects property values, see our TAMA 38 guide.
Rental Income Tax
If you’re renting out your property, Israel offers three reporting options:
- Exemption: If monthly rent is under roughly ₪5,700 (as of 2026), you pay no tax on rental income
- 10% Flat Tax: A simple fixed-rate option with no deductions — straightforward for smaller portfolios
- Marginal Income Tax: Rental income is added to your total income, but you can deduct legitimate expenses including depreciation, mortgage interest, repairs, and management fees
The best structure depends on your total income and investment goals. For landlords thinking about short-term rentals, Airbnb income is treated differently and typically falls under the marginal rate. Our short-term rental ROI guide covers the regulations and tax implications in detail.
Inheritance and Gift Tax
Israel does not currently have an inheritance tax or a gift tax on real estate, which makes it relatively favorable for inter-generational property transfers. Property inherited from a spouse or first-degree relative passes without a tax event at the time of transfer.
However, when the heir eventually sells the property, capital gains tax is calculated based on the original purchase price (not the inherited value), which can result in a significant tax bill if the property has appreciated substantially. If you’re dealing with an inherited property, our guide to inheriting property in Israel explains the full legal and tax process.
Value Added Tax (VAT)
The standard VAT rate in Israel is 18% as of January 1, 2025, and remains the same in 2026. VAT applies mainly to new construction and commercial properties, while second-hand residential sales between individuals are exempt.
In practice:
- New construction from developers: 18% VAT is typically included in the listed price
- Commercial real estate and land: Both are subject to VAT
- Professional services: Agent commissions, legal fees, and architect fees all carry 18% VAT
- Second-hand residential homes: No VAT when buying from a private seller
- Residential rentals: Generally VAT-exempt for leases under 25 years
Before signing, confirm whether the listed price already includes VAT — most reputable Tel Aviv developers and agencies quote VAT-inclusive prices. If you’re exploring new developments, our luxury Tel Aviv apartments for sale section gives a good overview of new-build pricing.
Foreign Buyers and Double Taxation
For international investors, a key question is how Israeli taxes interact with your home country’s tax system. Israel has double taxation treaties with the U.S., U.K., France, Canada, Germany, and many other countries, ensuring you aren’t taxed twice on the same income or gains.
With proper planning you can usually structure your investment to reduce overall tax liability. This area gets technical quickly, so Ronkin regularly connects overseas clients with English-speaking tax lawyers who handle both Israeli and international compliance. Our financing options guide for foreign buyers also covers how mortgage structures interact with tax planning.
For context on ongoing ownership costs beyond taxes, see our cost of living in Tel Aviv guide.
How Ronkin Can Help
Ronkin Real Estate works closely with clients before and after each transaction to make sure every tax implication is understood before you commit. Whether you’re buying your first apartment, selling a long-term investment, or building a rental portfolio, our experienced agents and legal partners simplify the process.
We connect you directly with vetted lawyers, accountants, and mortgage advisors who specialize in Tel Aviv real estate for both residents and foreign buyers. For the full legal framework around contracts, registration, and buyer protections, see our comprehensive legal guide for international buyers.
Our goal is to make the process transparent and stress-free — so you can focus on finding the right property while the professionals handle the details. Contact us today to speak with our team.
Frequently Asked Questions – Tel Aviv Real Estate Taxes
As of 2026, the Value Added Tax (VAT) in Israel is 18%. It applies to new construction, commercial properties, and professional services such as lawyer or agent fees. Second-hand residential property sales between individuals are exempt.
Foreign buyers pay higher purchase tax (Mas Rechisha) rates than Israeli residents, usually starting at 8%–10%. However, ongoing property taxes like Arnona are the same for everyone. Our Buying Property in Israel as a Foreigner guide explains all the current rules and benefits.
Yes. New immigrants may receive reduced purchase tax rates or exemptions on their first home purchase, provided they meet residency conditions. Ronkin’s legal partners can confirm eligibility and assist with the process.
Rates vary by neighborhood and property type — see our full Arnona Tel Aviv guide for current 2026 rates, discounts, and how the tax is calculated.
Questions about taxes? Contact Ronkin Real Estate — we’ll connect you with trusted tax professionals.