Acquisition Tax in Israel: A Silent Change That Costs Buyers Dearly

The Ministry of Finance recently made a decision. It will affect a large number of property buyers. The decision involves the freezing of the acquisition tax exemption ceiling (Mas Rechisha) for the year 2025.

What is it about?

In Israel, first-time homebuyers are entitled to a partial or full exemption from the acquisition tax. This exemption applies when purchasing their primary residence. This exemption ceiling is usually adjusted annually based on inflation. This year, the government has made a decision. Even with the rise in real estate prices, they have chosen to keep the ceiling fixed at 1,978,000 ILS.

What are the consequences?

This means that many properties — especially in major cities — will no longer be eligible for the exemption. These properties will be exposed to an acquisition tax. This tax can amount to tens of thousands of shekels. This is a serious blow for young families and new immigrants looking to buy their first home.

A controversial decision

The Ministry of Finance justifies this freeze as a necessary step to increase state tax revenues. But, professionals in the real estate sector and consumer associations criticize the move. They argue it hampers access to homeownership. It worsens social inequalities and does not solve the root of the housing crisis.

For more details, you can read the article published in the financial press on the topic:
🔗 https://www.globes.co.il/news/article.aspx?did=1001510263

What should you do?

Our law firm recommends that you:

• Check whether you are still eligible for full or partial exemption;
• Accurately simulate the real estate acquisition costs for 2025;
• Expect tax-related expenses in your financial planning.

Planning to buy property in Israel?

Contact METTOUDI PINCHASOV & Co for personalized legal and tax advice.