Everyone is waiting for the purchase tax to drop. It could go up instead.

By Chaim Shulman, Real Estate Advisor, Gabai Real Estate

If you're buying an investment property in Israel, or buying here from abroad, you've probably heard the talk: the 8% purchase tax might come down, and developers are lobbying hard for it. A lot of buyers are asking me whether it makes sense to wait until February and see. My honest answer is that the cut may never come, and the market isn't going to wait for you.

Today, anyone buying a home that isn't their only one pays 8% on the price up to NIS 6,055,070, and 10% above that. Foreign residents generally pay that rate even when it's their only home in Israel. New immigrants are the big exception. Olim buying a single home pay no tax up to NIS 1,978,745 and just 0.5% up to NIS 6,055,070, any time from a year before aliyah until seven years after.

The 8% rate was due to run through the end of 2026, after the Knesset Finance Committee extended it in December 2024. Then the Knesset dissolved. Under the rules for an election period, the Tax Authority says the rate now stays in place automatically for deals through February 10, 2027. That date wasn't a policy decision. It's simply how the law works during an election period. And if Israel heads to another election, the Tax Authority director says the rate stays for at least another three to four months.

What happens after that is up to the next government, and the people who set tax policy have said pretty openly what they want. The Tax Authority director says the Housing Ministry and most of his Finance Ministry colleagues want to keep 8% and 10%, and a senior Treasury official said back in 2024 that they had no interest in repeating the 2020 cut. They've left the door open to emergency steps if the market weakens, but nobody is presenting that as the plan.

Israel doesn't have a new government yet. No bloc won a majority on October 27, opposition leaders are backing Gadi Eisenkot to form a coalition, and the new Knesset was only sworn in on November 10. None of the likely partners has said anything publicly about the purchase tax.

In other words, waiting for February means counting on a government that hasn't been formed yet to make a decision nobody has promised.

The tax could also go up, and most of the buyers I talk to haven't considered that. The Tax Authority director estimates the state needs to find another NIS 30 to 40 billion next year, beyond what growth brings in. The US says it will end roughly $3.8 billion a year in military aid at the end of 2026, and defense officials say a NIS 40 billion shortfall is still open. The overall deficit has improved to 3.2% of GDP, but that new spending still has to be paid for.

Raising this exact tax is a familiar move. It went from 3.5% to 5% in 2013, up to 8% in 2015, and back to 8% in 2021 after a temporary cut. In 2022, a finance minister floated 12.5% on fourth-plus apartments. No one has proposed an increase, but no one has ruled one out either.

On a NIS 3 million apartment, going from 8% to 10% adds NIS 60,000 in tax.

Every past change has set off a rush:

• The 2015 hike. Buyers raced to beat the new rate, and more than 16,000 units sold in June that year.
• The 2020 cut. Investors froze while it was rumored, buying just 880 apartments in July. The month after it passed, they bought 1,600, up 87%. The second half of 2020 was the busiest six months for deals in 20 years, and 2021 hit a record 150,100.
• The 2021 hike. In October, 14,400 apartments sold in a single month, 4,800 of them to investors, with about 1,200 on announcement day alone.

If a cut is announced, expect the same thing: a wave of buyers, faster sales, and developers with no reason left to discount.

About 85,680 new apartments were sitting unsold at the end of August, roughly 26.7 months of supply at the current pace. Developers are working to move them. In March, a quarter of their open-market sales in the regions the Finance Ministry tracks came with financing benefits. In Tel Aviv, agents report unpublished discounts, and prices nationally are about 2% lower than a year ago.

I don't expect those terms to last. New-build sales were already up 6% year on year in August. A tax cut would bring investors back in a hurry, and the incentives would be the first thing to go.

Meanwhile, building costs keep climbing. The CBS construction input index rose 3.5% in the year to July 2026, driven by a 5.4% jump in wages. If you're buying new construction, check whether your payments are linked to it.

Here's what waiting can mean in shekels. Say you're looking at a NIS 3 million apartment. You decide to wait, and two things happen: the developer raises the price by 2%, and the purchase tax goes up from 8% to 10%.

Buy today

• Apartment price: NIS 3,000,000
• Purchase tax: NIS 240,000 (8%)
• Total you pay: NIS 3,240,000

Buy after waiting

• Apartment price: NIS 3,060,000 (2% higher)
• Purchase tax: NIS 306,000 (10% of the new price)
• Total you pay: NIS 3,366,000

That's NIS 126,000 more for the same apartment. NIS 60,000 of it comes from the higher price and NIS 66,000 from the higher tax. I'm not predicting this will happen. The point is that it doesn't take much for waiting to cost more than it saves.

Every change brought a burst of buying, and prices rose after both hikes and after the cut.

Two elections add to the uncertainty. In Israel, the next government's position on the tax is still unknown. In the US, a new Congress takes office in January after the November 3 midterms, and it's too early to know what that will mean for future aid to Israel.

What we do know is that the US has said the current aid of roughly $3.8 billion a year will end at the end of 2026. That leaves Israel to cover the gap itself. Defense officials already put the shortfall at NIS 40 billion, and the state needs to raise another NIS 30 to 40 billion next year. The more money Israel has to raise at home, the harder it is to justify giving up tax revenue, including from the purchase tax.

I'll be upfront: as an agent, I have an interest in deals moving forward. But the numbers above would be the same either way.

Waiting can make sense if you have no deadline, you haven't found the right property yet, and you're comfortable betting on a cut that no official body supports.

But if you've found the right apartment and negotiated good terms, I'd think hard before walking away from that to wait for a cut. It may not happen, the tax could go up instead, and if it does come, the rush of buyers that follows could eat up most of what you save.

Whatever you decide, have a real estate tax lawyer confirm your exact rate first, especially if you're making aliyah or this will be your only home.

This article is general market information, not tax, legal or financial advice. Figures are from the sources below as of November 10, 2026.

Sources

• Bizportal: Will purchase tax change in early 2027? (Hebrew)
• Emess: Tax Authority notice, 8% rate in force until Feb 10, 2027 (Hebrew)
• Bizportal: Tax Authority director, another election would extend the high purchase tax (Hebrew)
• Maariv: Tax Authority head on 2027 revenue needs (Hebrew)
• Globes: Knesset approves tax hike on investment homes (June 2015)
• Times of Israel: Investors rushed to buy ahead of purchase tax hike (Oct 2021)
• Israel Hayom: Investors coming back (Finance Ministry, Aug 2020)
• Bizportal: 85,680 new apartments await buyers (CBS, June to August 2026, Hebrew)
• Ynet: Half of foreign homebuyers are Americans (Finance Ministry, March 2026)
• Barnea Jaffa Lande: Reduced purchase tax for investors (2020)
• Israel Tax Authority: Tax benefits for new immigrants, 2026 (gov.il)
• Nadlan Center: Finance Committee extends 8% to end of 2026 (Hebrew)
• Magdilim: Aharonovitz on emergency steps (Hebrew)
• ICE: Treasury intends to extend the 8% rate (Hebrew)
• Israel Hayom: Israel's 2026 election results released
• Al Jazeera: Opposition leaders back Eisenkot
• Siasat: Knesset swearing-in date
• ABC News: Trump says $4B in Israel military aid will end this year
• Times of Israel: Trump aid bombshell could set off scramble
• Globes: Tax cut seen freeing up Israel's housing market
• Globes: Liberman plans higher tax on four or more apartments
• Globes: Israel's fiscal deficit continues to narrow (Sept 2026)
• Globes: Treasury: Furloughed workers selling investment homes (Sept 2020)
• Globes: Housing sales hit 20-year high in 2020
• Globes: Investment home purchases soar in rush to beat tax rise (Dec 2021)
• Bank of Israel Annual Report 2025, Ch. 8: The Housing Market (Table 8.1)
• Ynet: CBS June to August 2026 sales (Hebrew)
• Times of Israel: Housing snapshot, October 2026
• Times of Israel: Housing market ready for a reset in 2026
• Israel National News: CBS home prices, April and May 2026
• Bizportal: CBS construction input index, July 2026 (Hebrew)
• Bank of Israel Annual Report 2016, Ch. 9: Construction and the Housing Market
• Globes: Knesset approves investment home purchase tax cut (July 2020)
• K&L Gates: 2026 Midterm Election Guide

Chaim Shulman is a Real Estate Advisor at Gabai Real Estate, a boutique Anglo-Israeli agency serving Anglo and Israeli buyers across Jerusalem, Efrat, Ma'ale Adumim, Ra'anana, Tel Aviv, and communities throughout Israel. To have Chaim look at the numbers on a purchase you are weighing, reach out at chaim@gabairealestate.com or +972-58-583-3377.