What are all the property taxes and fees in Jerusalem?

Authored by the expert who managed and guided the team behind the Israel Property Pack

Yes, the analysis of Jerusalem's property market is included in our pack

Who is the author of this content?

SANDS OF WEALTH

A team specialized in real estate investing in MENA countries (Morocco, UAE, Oman, etc.)

We are a team of financial experts, legal professionals, developers, and local real estate specialists dedicated to helping people like you avoid mistakes when investing in real estate in a foreign place, particularly in Jerusalem. If you'd like to learn more about us, you can check our presentation page.

How this content was created 🔎📝

At Sands of Wealth, we explore the Jerusalem real estate market every day. Our team doesn't just analyze data from a distance—we're actively engaging with local realtors, investors, and property managers in cities like Jerusalem, Tel Aviv, and Haifa. This hands-on approach allows us to gain a deep understanding of the market from the inside out.

These observations are originally based on what we've learned through these conversations and our observations. But it was not enough. To back them up, we also needed to rely on trusted resources

We prioritize accuracy and authority. Trends lacking solid data or expert validation were excluded.

Trustworthiness is central to our work. Every source and citation is clearly listed, ensuring transparency. A writing AI-powered tool was used solely to refine readability and engagement.

To make the information accessible, our team designed custom infographics that clarify key points. We hope you will like them! All illustrations and media were created in-house and added manually.

What type of property affects my taxes and which buyer profile determines my costs?

Your property taxes and fees in Jerusalem depend on whether you're buying new construction or second-hand property, residential or commercial use, and your buyer status as Israeli resident or foreign buyer.

New construction from developers includes 18% VAT in the purchase price as of September 2025, while second-hand properties are VAT-exempt on the sale price. Residential properties under 80m² may qualify for reduced purchase tax brackets, while commercial properties face different tax structures entirely.

Israeli residents benefit from progressive purchase tax starting at 0% for properties up to ₪1,880,755, while foreign buyers pay a flat 8-10% purchase tax regardless of property value. First-time buyers who are Israeli residents or new immigrants (Olim) receive the most favorable tax treatment with potential exemptions worth thousands of shekels.

Your exact purchase price and property size in square meters directly determine which tax brackets apply and calculate your total costs. A ₪2,000,000 property triggers different rates than a ₪1,500,000 purchase, making precise calculations essential for budgeting.

How much purchase tax will I pay on a ₪2,000,000 property in Jerusalem?

Purchase tax (Mas Rechisha) in Jerusalem follows progressive brackets that differ significantly between Israeli residents and foreign buyers.

For Israeli residents buying their first or only home, the current brackets as of September 2025 are: 0% up to ₪1,880,755, then 3.5% from ₪1,880,755 to ₪2,272,840, and 5% above ₪2,272,840. On a ₪2,000,000 purchase, you pay zero tax on the first ₪1,880,755, then 3.5% on the remaining ₪119,245, totaling ₪4,174 in purchase tax.

Foreign buyers face much higher rates: 8% on amounts up to ₪1,880,755 and 10% from ₪1,880,755 to ₪2,272,840. The same ₪2,000,000 property would cost a foreign buyer ₪162,462 in purchase tax - nearly 40 times more than an Israeli resident.

These brackets are updated annually and tied to the consumer price index, so rates may adjust slightly each year. The significant difference between resident and foreign buyer rates reflects Israeli policy to prioritize local homeownership.

What VAT applies when buying from a developer and which services include VAT?

All new construction purchases from developers in Jerusalem include 18% VAT within the quoted purchase price as of January 2025, increased from the previous 17% rate.

When developers quote ₪2,000,000 for a new apartment, this price already includes the full VAT amount - you don't pay VAT separately on top. However, second-hand property purchases are completely VAT-exempt on the sale price itself, though professional services still carry VAT.

Professional services that add VAT to their fees include lawyer fees (₪3,600 VAT on a ₪20,000 legal fee), agent commissions (₪7,200 VAT on a ₪40,000 commission), bank processing fees, appraisal costs, and most other service providers involved in the transaction.

This means your total VAT exposure on professional services typically ranges from ₪8,000-15,000 depending on which services you use, even when buying second-hand property where the purchase price itself is VAT-free.

What are my total legal and registration costs in shekels?

Legal/Registration Cost	Typical Rate	Amount (₪2M property)
Attorney Fee	0.5-1.5% + VAT	₪23,600 (1% + VAT)
Land Registry (Tabu)	Flat fee	₪2,000-3,000
Israel Land Authority	If applicable	₪2,000-7,000
Developer's Lawyer	Up to 0.5% + VAT	₪0-11,800
Total Legal/Registration	Combined	₪27,600-45,400

It's something we develop in our Jerusalem property pack.

How much will mortgage-related costs add to my 70% LTV loan?

Mortgage costs for a 70% loan-to-value mortgage on a ₪2,000,000 Jerusalem property typically total ₪8,000-15,000 across multiple required fees.

Bank origination and handling fees range from 0.25% to 0.5% of the loan amount, costing ₪3,500-7,000 on a ₪1,400,000 mortgage. Professional property appraisal costs ₪2,000-3,000, while mortgage registration charges (he'arat azhara) add another ₪200-500 to your total.

Required insurance premiums include both structural insurance for the property and life insurance to protect the loan, typically costing ₪2,000-5,000 annually. Some banks also charge additional processing fees for document preparation, credit checks, and file management.

These costs are due upfront or at closing, separate from your down payment and other purchase expenses. Factor these mortgage fees into your initial cash requirements when calculating how much you need available for the transaction.

What will I pay for buyer's broker commission including VAT?

Standard buyer's broker commission in Jerusalem is 2% of the purchase price plus 18% VAT on the commission amount.

On a ₪2,000,000 property purchase, the base commission equals ₪40,000, with ₪7,200 in VAT added, totaling ₪47,200 paid to your buyer's agent. This rate is fairly standardized across Jerusalem, though some agents may negotiate slightly lower rates for higher-value properties or repeat clients.

The seller typically pays their own listing agent separately, so your ₪47,200 commission is in addition to whatever the seller pays their agent. Some buyers attempt to negotiate commission reductions, but most established Jerusalem agents maintain the 2% + VAT rate.

This commission is usually paid at closing through your lawyer's escrow account, so include this ₪47,200 in your closing cost calculations alongside other transaction fees.

How much is annual municipal tax and building fees for an 80m² apartment?

Annual municipal tax (Arnona) in Jerusalem ranges from ₪50-100 per square meter depending on your specific address and property usage classification.

For an 80m² residential apartment, expect annual Arnona between ₪4,000-8,000, paid in monthly installments of ₪333-667. Central Jerusalem locations and newer buildings typically fall toward the higher end of this range, while peripheral neighborhoods may qualify for lower rates.

Building management fees (Va'ad Bayit) add ₪150-400 monthly depending on building amenities like elevators, security, gardens, or swimming pools. This translates to ₪1,800-4,800 annually for standard building maintenance, utilities, and services.

Combined, your annual Arnona and building management costs total ₪5,800-12,800 per year for an 80m² apartment, making this a significant ongoing expense to factor into your ownership budget alongside mortgage payments.

It's something we develop in our Jerusalem property pack.

Which discounts and exemptions can reduce my property costs?

Several discount programs can significantly reduce your property taxes and fees in Jerusalem, with potential savings ranging from ₪4,000 to over ₪20,000 depending on your eligibility.

1. **First-time homebuyers** who are Israeli residents receive reduced purchase tax brackets, potentially eliminating the entire tax on properties under ₪1,880,7552. **New immigrants (Olim)** qualify for purchase tax exemptions or reductions for up to 7 years after making Aliyah, saving ₪4,000-20,000+ on typical purchases3. **Senior citizens over 62** may receive up to 50% Arnona reductions, saving ₪2,000-4,000 annually on municipal taxes4. **Disabled individuals** with official certification can obtain both purchase tax exemptions and ongoing Arnona discounts worth thousands annually5. **Low-income households** meeting specific income thresholds qualify for reduced Arnona rates and some legal fee assistance programs

Required documentation includes Teudat Zehut (Israeli ID), Oleh certificates for new immigrants, disability certifications from the National Insurance Institute, senior status verification, and income statements or tax returns proving financial eligibility. Each program has specific application processes and deadlines that must be met before or during the purchase process.

What one-time utility connection and development fees should I expect?

Utility connections and meter installations in Jerusalem typically cost ₪2,000-6,000 total across electricity, water, gas, and fiber internet services.

Electric company connections range from ₪800-2,000 depending on meter type and electrical capacity needed. Water authority hookups cost ₪600-1,500 including meter installation and initial deposits. Natural gas connections add ₪500-1,200, while fiber internet installations range from ₪200-800 depending on the provider and building infrastructure.

New developments may include additional infrastructure levies or improvement fees charged by the municipality or developer to cover neighborhood utilities, roads, and community facilities. These development charges can range from ₪1,000-5,000 but are typically disclosed during the purchase process.

Some utilities require security deposits that are refunded after establishing payment history, while others charge connection fees that become part of your ongoing service costs.

How much will renovation permits and betterment levies cost?

Renovation permits in Jerusalem cost ₪1,000-4,000 for standard interior work, with betterment levies potentially adding ₪60,000-150,000 on major improvements worth ₪300,000.

Building permits for structural changes, room additions, or balcony enclosures require municipal approval with fees based on project scope and square meters affected. Simple interior renovations without structural changes need minimal permits, while additions or external modifications require detailed architectural plans and higher fees.

Betterment levy (Hetel Hashbacha) applies when your property value increases due to municipal planning changes, zoning improvements, or infrastructure development. This tax typically ranges from 20-50% of the assessed value improvement, making it a significant cost on major renovations.

On a ₪300,000 renovation that increases property value by the full amount, betterment levy could reach ₪60,000-150,000. However, the actual levy depends on how much of the value increase the municipality attributes to public improvements versus private investment.

We did some research and made this infographic to help you quickly compare rental yields of the major cities in Israel versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you're planning to invest there.

What taxes will I face when selling my Jerusalem property?

Capital gains tax (Mas Shevach) is your primary tax when selling Jerusalem property, typically 25% of profit for non-primary residences or properties held under specific time periods.

On a property purchased for ₪2,000,000 and sold for ₪2,500,000, your ₪500,000 profit faces ₪125,000 in capital gains tax before any exemptions or adjustments. However, your primary residence may qualify for partial or complete exemptions if you've lived there for required minimum periods.

Additional municipal betterment levies may apply if the city has made infrastructure improvements that increased your property's value since purchase. These levies are calculated separately from capital gains tax and vary by specific municipal projects affecting your area.

Long-term ownership (typically over 4 years for primary residence) and inflation adjustments can reduce your taxable profit, while foreign residents face different rates and exemption rules than Israeli residents.

It's something we develop in our Jerusalem property pack.

When are taxes due and what happens if I pay late?

Most property taxes and fees in Jerusalem must be paid within 60 days of contract signing, with late payments incurring monthly interest charges and penalties that compound quickly.

Purchase tax, VAT, and Land Registry fees are due within 60 days of signing the purchase agreement. You can pay through the Israeli Tax Authority online portal, bank transfers, or through your attorney's escrow account. Some buyers arrange installment payment plans, though these carry interest charges.

Late payment penalties start at 4% monthly interest plus additional fines that increase each month you remain delinquent. A ₪10,000 late payment can grow to ₪12,000-15,000 within six months due to compounding penalties and interest charges.

Arnona municipal taxes are typically paid monthly or quarterly, with discounts available for annual advance payments. Missing Arnona payments can result in collection actions, property liens, and inability to sell or transfer the property until all municipal debts are cleared.

Conclusion

This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.

Sources

1. Buy It In Israel - Purchase Tax Guide
2. Easy Aliyah - Property Purchase Tax Guide
3. Davidson Real Estate - Property Costs Breakdown
4. Buy It In Israel - Extra Costs Guide
5. Buy It In Israel - 2025 Tax Reforms
6. VAT Update - Israel VAT Rate Changes
7. Israel Property Hub - Real Estate FAQ
8. Nefesh B'Nefesh - Aliyah Purchase Tax