VAT on a New-Build in Israel: 18% Is Inside the Sticker
A developer’s new-build is a VAT transaction at the official 18 percent rate from 1 January 2025. Do not add that 18 percent on top of a VAT-inclusive sticker. A typical private second-hand sale of a residential apartment is not that transaction. Lawyer and agent fees stay at 18 percent. We invent no citywide new-build share.
The rate is an order cell, not a listicle
English pages still quote 17% or add 18% on top of a developer sticker. Value Added Tax Law, 5736-1975 s. 2 does neither. It imposes value added tax (VAT) (מע״מ) on a transaction (עסקה) in Israel at a single rate of the price, as the Minister of Finance sets by order after consulting the Knesset Finance Committee. Value Added Tax (Rate of Tax on a Transaction and on Import of Goods) Order, 5765-2005 s.1 is that order: the rate is 18% of the price of the transaction or the goods. Value Added Tax (Rate of Tax on a Transaction and on Import of Goods) (Amendment) Order, 5784-2024 replaced “17%” with “18%” and commenced on January 1, 2025 (א' בטבת התשפ"ה). The amendment is Kovetz HaTakanot 5784, 1840, published 2024-02-28. The official rate on a s.2 transaction is 18% of the price from 1 January 2025. A developer selling a new apartment in the course of business is that transaction. A typical private second-hand sale of a residential apartment is not. Do not add 18% on top of a VAT-inclusive sticker.
A foreign passport does not change that cell. There is no property-for-residency programme either — buying is not a visa. Who may hold title is can foreigners buy. The tax this page names is value added tax (VAT), not purchase tax (mas rechisha), which stays on the purchase-tax guide.
A new-build is a dealer sale. A private resale usually is not.
Section 1 defines a transaction. A transaction includes the sale of an asset or the provision of a service by a dealer in the course of the dealer's business, including the sale of equipment. A developer selling a new residential apartment (דירת מגורים) is a dealer (a person who sells an asset or gives a service in the course of business) (עוסק) selling in the course of business. That sale is the s.2 transaction. The 18% order cell applies to its price. Market practice is to quote that price VAT-inclusive — the 18% is already inside the sticker. Section 7 then says the price of a transaction is the agreed consideration. The statute does not add a second 18% after that consideration.
A typical second-hand sale is a different cell. An occasional transaction (עסקת אקראי) of land is a sale of real estate to a dealer by a person whose occupation is not the sale of real estate. A sale of real estate by such a person, except a sale of a residential apartment, to a non-profit institution or a financial institution. A typical second-hand sale of a residential apartment by a private owner who is not a dealer, to another private buyer, is not a dealer sale and is not this occasional-transaction cell. It is therefore not a s.2 transaction. A sale of that apartment to a dealer is the land-to-dealer occasional cell. Section 5(b) is the leftover dealer-resale track: a real-estate dealer who bought a residential apartment from a private person is taxed on the margin, not the full price. We publish no typical margin. The 1974 assurance-law 7% ceiling on a builder-seller’s unsecured take sits on purchase contract and deposit. Title is still Tabu, not the invoice.
What 18% of a VAT-inclusive sticker looks like — if
We will not pretend the July 2026 asking panel is a new-build census. Citywide median asking is ₪4,850,000 (≈ $1,310,811 / €1,212,500 / £1,021,053; n = 1,037 tracked active listings). Implied size — median asking divided by apartment-scale median ₪/sqm (n = 987) — is 88 sqm (950 sqft). Those listings mix second-hand and whatever a developer chose to post. We do not split them. The only honest join is an if: if a developer quoted that median as a VAT-inclusive sticker, the 18% / 118 component inside it would be ₪739,831 (≈ $199,954 / €184,958 / £155,754), and the net-of-VAT slice would be ₪4,110,169. That is arithmetic on the order cell. It is not the VAT on a named Tel Aviv project.
| Line | What it is | Shekels |
|---|---|---|
| If VAT-inclusive sticker | July 2026 citywide median asking (n=1,037) | ₪4,850,000 |
| VAT component inside that sticker | 18% / 118 of the inclusive price | ₪739,831 |
| Net-of-VAT slice | Inclusive price minus that component | ₪4,110,169 |
| Non-resident purchase tax on the same sticker | Added. Not VAT. Frozen brackets. | ₪388,000 |
Services, rent, and a rate change after you sign
Lawyer and agent fees are a service given by a dealer (a person who sells an asset or gives a service in the course of business) in the course of business. That is the same s. 1 transaction at the same 18% order cell. A quoted percentage is before that 18% unless the engagement letter says the quote is inclusive. There is still no official citywide lawyer or agent tariff — that honesty rule stays on lawyers, fees and costs and dual representation. Section 6 is the pass-through if the rate is raised after the parties agreed: If tax was imposed on a transaction, or the rate of tax on it was raised, after the transaction was agreed, the dealer may demand that the buyer pay the dealer the amount of the tax or the additional tax the dealer became liable for, unless otherwise provided in the agreement or in any law that deals with price control. Confirm whether your off-plan contract already priced the 18% cell or left a s.6 gap.
Holding the flat is not a second VAT sale. A residential letting for a period that does not exceed 25 years is exempt, except a letting for hospitality in a hotel. Israeli income tax on that rent is rental income tax, not this order. Urban-renewal construction can sit on a zero-rate cell under ss.31a and 31b — listed pinui-binui and strengthening-plan services, some of them only up to a value ceiling. We do not republish that ceiling. The pinui-binui process page is pinui-binui in Israel; the seismic leftover is TAMA 38 for buyers. Construction-index linkage on an off-plan price is the madad line, not VAT.
What we still will not invent
Six cells we will not publish. A foreign-buyer VAT exemption on a Tel Aviv apartment. An input-tax refund for a residential buyer. A citywide new-build share of the asking panel. That the July 2026 median asking price is a VAT-inclusive developer sticker — the table is an if. A purchase-tax split of VAT-inclusive versus net. A typical dealer-resale margin under s.5(b). Keys versus title stay on handover versus Tabu. Funds still move through the AML and trust-account gate.
Frequently asked questions
Is VAT added on top of a new-build price in Israel?
No — not if the developer’s sticker is already VAT-inclusive. Value Added Tax Law, 5736-1975 s.2 imposes value added tax (VAT) (מע״מ) on a transaction (עסקה) in Israel at the single rate the Finance Minister sets by order. That order’s current cell is 18% of the price from January 1, 2025. You do not add 18% again on top of a price that already contains it.
Do I pay VAT on a second-hand Tel Aviv apartment?
Not on a typical private resale. A transaction includes a sale by a dealer (a person who sells an asset or gives a service in the course of business) (עוסק) in the course of business. An occasional transaction (עסקת אקראי) of land is a sale to a dealer by a person whose occupation is not selling land — or a sale by that person, except a residential apartment (דירת מגורים), to a non-profit or financial institution. A private owner selling the home they live in to another private buyer is neither cell.
What is the official Israeli VAT rate in 2026?
Value Added Tax (Rate of Tax on a Transaction and on Import of Goods) Order, 5765-2005 s.1 says the rate on a transaction in Israel and on the import of goods is 18% of the price. Value Added Tax (Rate of Tax on a Transaction and on Import of Goods) (Amendment) Order, 5784-2024 replaced 17% with 18% and commenced on January 1, 2025 (א' בטבת התשפ"ה). The 2024 amendment is KT 5784, 1840.
Do foreign buyers get a VAT exemption on a Tel Aviv apartment?
No. The Law and the rate order do not print a foreign-passport exemption on a residential purchase. A non-resident still meets the 18% cell on a dealer new-build and on professional services supplied in Israel. Eligibility to hold Tabu title is a different page. We publish no input-tax refund for a residential buyer.
Do lawyer and agent fees carry VAT?
Yes, when they are a service given by a dealer (a person who sells an asset or gives a service in the course of business) in the course of business — that is a s.1 transaction at the same 18% order cell. A quoted “1%” lawyer fee or “2%” agent commission is before that 18% unless the engagement letter says otherwise. There is still no official citywide lawyer or agent tariff.
If the VAT rate rises after I sign, who pays the difference?
Section 6 lets the dealer demand the buyer pay the tax or the additional tax the dealer became liable for, unless the agreement or a price-control law says otherwise. That is a pass-through after a rate change. It is not a licence to add 18% on top of a sticker that already included it on the day you agreed.
Is renting the apartment after I buy it a VAT sale?
Section 31(1) exempts a residential letting for a period that does not exceed 25 years, except a letting for hospitality in a hotel. That is a VAT cell. Israeli income tax on the rent is a different statute and a different page.
Does urban renewal wipe VAT on a new unit?
Sections 31a and 31b set a zero rate on listed pinui-binui and strengthening-plan construction cells, some of them up to a value ceiling. Zero-rate is not “no VAT statute”. We do not republish that ceiling as a Tel Aviv average. The process sibling is the pinui-binui page.
Where this fits
The comparison of this stack against a private resale is new-build vs second-hand. This page sits next to lawyers, fees and costs — the off-plan extras that are not a second VAT line — and purchase contract and deposit, where the 1974 assurance law’s bank guarantee returns every shekel paid except the VAT component. Purchase tax is still mas rechisha. Due diligence is the title and survey file. The cluster map is the foreign-buyer guide. Hebrew terms are in the glossary. Live asking figures sit on Tel Aviv property prices. Return to the buying-guide hub.
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