Purchase Tax on a Second Apartment and Foreign Residents: 8% and 10% Through 10.2.2027

Purchase tax on a second apartment — as well as on any residential property acquired by a person who is not an individual Israeli resident — is calculated under the temporary provision in Section 9(g1v) of the Land Taxation (Appreciation and Acquisition) Law, 5723-1963: 8% on the portion of value up to NIS 6,055,070, and 10% on the portion above that amount. The tax applies from the very first shekel. The provision was originally set to expire on 31.12.2026; following the dissolution of the Knesset, it applies to purchases made through 10.2.2027 (inclusive).

The law distinguishes between two tracks. An individual Israeli resident whose purchased apartment is his sole residential property pays according to the brackets in Section 9(g1g)(3). Every other purchaser of a residential property pays under the temporary provision in Section 9(g1v)(1) — that is, 8% up to NIS 6,055,070 and 10% on the amount above. This threshold was frozen in the 2025 Arrangements Law and has not been updated since.

By comparison, a sole-apartment purchaser pays no tax on the portion of value up to NIS 1,978,745. Above that, the rate is 3.5% up to NIS 2,347,040 and 5% up to NIS 6,055,070. These brackets are frozen until 15.1.2028.

Who Is Subject to the 8% and 10% Rates

• An individual Israeli resident who already owns a residential property and is purchasing an additional apartment — whether for investment, for children, or for any other purpose.

• A foreign-resident individual, even if this is his only apartment. The Israel Tax Authority's notice applies the temporary provision to every residential-property purchase by a person who is not an individual Israeli resident.

• A company or other legal entity purchasing a residential property, for the same reason: they are not an individual.

Extension of the Temporary Provision to 10.2.2027

The brackets were set by order through 31.12.2026. On 12.10.2026 the Israel Tax Authority published a notice on the extension of the temporary provision regarding purchase tax on an additional apartment. According to the notice, Section 38 of Basic Law: The Knesset extends statutory provisions that were due to expire between 10.9.2026 and 10.2.2027; consequently, the 8% and 10% rates apply to purchases through 10.2.2027 (inclusive). What will apply to later purchases depends on a decision by the next Knesset, and as of today no such decision has been made.

The purchaser files a declaration with the Israel Tax Authority within 30 days of the date of purchase, pursuant to Section 73(c) of the Law. In the declaration, the purchaser self-assesses the tax and indicates whether he is claiming the sole-apartment brackets or any other relief. Upon receipt of the declaration, a tax-assessment notice is issued together with a payment voucher, and the file is forwarded to the assessor for review.

For example, a second apartment valued at NIS 3,000,000: the tax is 8% of the entire amount — NIS 240,000. Had this been a sole apartment, the tax would have been approximately NIS 45,538. For an additional apartment valued at NIS 7,000,000, the tax is NIS 484,406 on the first NIS 6,055,070, plus NIS 94,493 on the remainder — a total of approximately NIS 578,899.

What the Declaration Includes

According to the Israel Tax Authority's glossary, the purchaser's declaration details the right acquired, the transaction particulars and consideration, the tax amount and method of calculation, and any entitlement to an exemption. The declaration must also include the payment-method details for the consideration. A purchaser who does not yet have these details at the time of filing declares accordingly and supplements them later. The Authority issues a notice of the tax amount based on the declaration within 20 days of its submission.

This is where the purchase is effectively classified as a sole apartment, a replacement apartment, or an additional apartment. A purchaser claiming the sole-apartment brackets must declare all apartments in his ownership — including partial interests and inheritances — and attach the documents proving eligibility.

Replacement Apartment: Buying Before Selling

A person who owns a sole apartment and buys another one in its place is ultimately entitled to the sole-apartment brackets, provided the previous apartment is sold in time. Under Section 9(g1g)(2)(b), for a purchase made from 1.6.2025 the deadline is 24 months from the date of purchase of the replacement apartment. For a purchase made between 1.6.2023 and 31.5.2025, the period is 18 months. For an apartment purchased from a developer, the previous apartment may also be sold within 12 months of taking possession.

In practice, pursuant to Land Taxation Execution Directive 2/2026, the purchaser may request a suspension of collection enforcement in the purchase-tax assessment. After the previous apartment is sold, an application to amend the assessment is filed, and the assessor verifies that the conditions have been met. The same execution directive also explains the Extension of Time Periods Law enacted in the wake of the war: any period that fell, even for a single day, between 28.2.2026 and 31.5.2026 was extended by three months.

It is advisable to verify the classification before signing, because — as the example above illustrates — the difference between the two tracks can amount to hundreds of thousands of shekels. The following are situations in which the answer is not always straightforward:

1. You own a partial interest in another apartment. Under Section 9(g1g)(4)(a), an interest of up to one-third in another apartment is not counted. For an apartment received by inheritance, an interest of up to one-half is not counted.

2. You are new immigrants or veteran returning residents. Under Section 9(g1g)(4)(b), a person who became an Israeli resident for the first time or a veteran returning resident within two years of the date of purchase will be deemed an Israeli resident for the purpose of the sole-apartment brackets.

3. The signing is expected close to 10.2.2027. The current extension expires on that date, and it is not yet known what will apply afterward.

4. The previous apartment is being sold close to the end of the period, or the replacement apartment is delivered by the developer late. In such cases, the deadline must be calculated according to the date of purchase, the date possession was received, and the Extension of Time Periods Law.

5. The previous apartment was purchased through a buyers' group. According to Execution Directive 2/2026, the period for selling it is 18 months from the date its construction was completed, not from the date the new apartment was purchased.

The purchase-tax rates are also explained on the Capital Gains Tax and Purchase Tax page, and anyone who subsequently sells the previous apartment will find the exemption conditions in the article on Capital Gains Tax Exemption for a Sole Apartment.

Real-estate taxation matters at the firm are handled by Adv. Ariel Epstein, a partner at the firm, who trained at the Legal Bureau of the Customs and VAT Division of the Israel Tax Authority.