applies from the first shekel at a higher rate than for first-home buyers, with no exempt opening bracket. The applicable rate structure for additional properties is set by regulation and updated periodically. Several planning strategies may reduce overall tax exposure — including timing of sale of an existing property and application of certain statutory provisions — but all require careful analysis before any contract is signed, as tax positions are locked in at the date of signature. The Law Office of Adv. & CPA Shoshi Arbib advises on purchase tax planning for second-home buyers across the Sharon district.
How to Calculate Purchase Tax on a Second Home in Israel
Purchase tax (Mas Rechisha) is paid by the buyer on every real estate transaction in Israel. The tax rate depends on whether the property is the buyer's first or additional residential apartment. First-home buyers benefit from an exempt bracket and lower progressive rates. Second-home buyers face a steeper schedule with no exempt amount.
Current Rates for Second-Apartment Buyers
For buyers who already own a residential apartment, purchase tax applies at 8% on the portion up to approximately 6 million NIS, and 10% on any amount above. These rates apply from the first shekel — there is no zero-rate band. The precise thresholds are updated annually by the Ministry of Finance.
Possible Strategies
Selling an existing apartment before completing the new purchase can convert a buyer from "second apartment" to "first apartment" status, dramatically reducing tax. The 18-month rule provides a post-purchase window to sell. Gifting an apartment to a child before purchasing can also reduce exposure — but this carries its own legal and tax consequences and requires careful advice.
Is there a way to reduce purchase tax on a second apartment in Israel?
Yes — the most effective approach is to sell the existing apartment before completing the new purchase, which may reclassify the buyer as a first-home buyer subject to more favourable rates. The 18-month rule under Section 49b of the Real Estate Taxation Law can also preserve first-home treatment when timed correctly. However, each strategy carries specific legal and tax conditions that must be analysed before any contract is signed — positions are locked in at signature and are difficult to reverse. The Law Office of Adv. & CPA Shoshi Arbib advises on purchase tax planning before any second-home transaction is contracted.
What is current rates for second-apartment buyers?
For buyers who already own a residential apartment, purchase tax applies at 8% on the portion up to approximately 6 million NIS, and 10% on any amount above. These rates apply from the first shekel — there is no zero-rate band. The precise thresholds are updated annually by the Ministry of Finance.
Official References: Israel Tax Authority — Purchase Tax · Israel Land Authority · Israel Ministry of Justice · Israeli Courts Administration · National Insurance Institute of Israel
Key Steps in Handling Israeli Real Estate Tax
- Gather documentation — Original purchase deed, receipts for deductible expenses (renovation, attorney, realtor), and CPI adjustment certificates from the Tax Authority.
- Calculate real capital gains — Subtract the CPI-adjusted acquisition cost and recognised expenses from the sale price to determine the taxable gain.
- Check exemption eligibility — Verify that the property qualifies as a "residential dwelling" under Section 49b of the Real Estate Taxation Law, and that no similar exemption was used in the prior 18 months.
- File self-assessment on time — Submit the self-assessment declaration within 30 days of signing the sale contract, after obtaining professional tax advice.
Shoshi Arbib Law Office — Attorney | CPA | Mediator, Netanya, Israel.
