Buying in Tel Aviv vs the US: costs and taxes

Tel Aviv will sell an apartment to anyone, but the purchase tax hinges on one question: are you an Israeli resident, and does it count as your only home?

The short version

Americans can buy apartments in Tel Aviv. There's no ban on foreign buyers, though most land in Israel is state land held through long leases.
Purchase tax (mas rechisha) depends on residency. A non-resident or an owner of another home pays 8% from the first shekel and 10% at the top. An Israeli resident buying a single home pays nothing on the first ILS 1,978,745 [1].
New immigrants (olim) get a big break: 0.5% on the band from ILS 1,978,745 up to ILS 6,055,070 if it's their only home [1].
Israeli banks cap mortgages at 75% of the value for a first home and 50% for investors [2].
The IRS taxes your worldwide gain. Section 121 shelters up to USD 250,000 (USD 500,000 joint), and Israeli betterment tax counts toward the foreign tax credit [3][4].

USD conversions use the European Central Bank cross rate of October 29, 2026 (ILS 3.116 per USD, from EUR/ILS 3.4680 and EUR/USD 1.1130), rounded.

Can Americans buy in Tel Aviv?

Yes. A US citizen can buy an apartment in Old North, Florentin or Neve Tzedek as a foreign resident, an Israeli resident or a new immigrant. Many Americans in Tel Aviv are dual citizens through aliyah, and that status matters more than the passport you show the lawyer.

Two things are different from a closing back home:

Most land is state land. In Israel, most land is owned by the state and managed by the Israel Land Authority, which grants long leases. A city apartment is usually a registered long lease rather than outright freehold. Some transfers to non-Israelis need ILA approval, so have your lawyer check the registration (tabu or the ILA's records) early.
Lawyers run the deal. Both sides use a real estate lawyer, who checks title and liens, drafts the contract, files the purchase tax return and registers the transfer. There's no title insurance culture in the American sense.

Also check whether the building has a mamad (safe room) or a shelter nearby. It's a real question in Tel Aviv, and it affects both your daily life and resale.

Getting a loan: Israeli bank or US lender?

In Tel Aviv. Bank of Israel rules cap how much any bank can lend against a home: 75% of the value for first-time buyers, 70% for upgraders who sell their previous home within 18 months, and 50% for investors who own more than one home [2]. Foreign residents should expect to be held to the lower end. Israeli mortgages usually mix several "tracks" (prime-linked, fixed, CPI-linked), so compare the blend, not just one headline rate.

Back home. Many Americans borrow in dollars against a US home and pay cash in Israel. Our guide to US mortgages for Americans living abroad covers what US lenders ask for.

The currency trap. The IRS measures a shekel mortgage in dollars. If the shekel weakens while you owe it, paying the loan off can create a taxable US currency gain, even though you repaid exactly what you borrowed. A CPI-linked track adds another wrinkle. Our guide to currency gains on a foreign mortgage explains how it works.

Costs side by side

Purchase tax brackets as published for 2026 [1]. Israel updates brackets with the index, so confirm on your signing date.

	Tel Aviv	New York (the US example)
Can you buy?	Yes; most land is ILA long-lease; some transfers to foreigners need ILA approval	Yes; co-op boards can turn any buyer down
Purchase tax, Israeli resident, single home	0% to ILS 1,978,745; 3.5% to ILS 2,347,040; 5% to ILS 6,055,070; 8% to ILS 20,183,565; 10% above [1]	City and state transfer taxes, mostly paid by the seller; the buyer pays the state's "mansion tax" on homes of USD 1 million or more
Purchase tax, non-resident or additional home	8% up to ILS 6,055,070; 10% above [1]	No extra tax for US citizens
Purchase tax, olim (single home)	0% to ILS 1,978,745; 0.5% to ILS 6,055,070; 8% to ILS 20,183,565 [1]	n/a
Legal and agent fees	Lawyer's fee, often a percentage of the price; agent fees are common for buyers and sellers; get quotes	Attorney, title insurance and recording fees; commissions negotiable
Annual property tax	Arnona, a municipal tax by size and zone, usually paid by the occupant	Property tax set by the city; condo and co-op charges on top
Tax on selling your home	Betterment tax (mas shevach), generally 25% of the real gain; exemptions for a single home [5]	Federal tax after Section 121; New York State and City income tax can apply
US tax on the gain	Yes, worldwide, in dollars; Section 121 and the foreign tax credit can help [3][4]	Yes; Section 121 if you pass 2 of 5 years [3]

A worked example

Illustration only. An ILS 4,000,000 apartment (about USD 1.28 million):

Buyer	Purchase tax	In USD
Israeli resident, single home	about ILS 95,500	about USD 30,700
Non-resident, or owns another home	ILS 320,000	about USD 102,700

The resident math: nothing on the first ILS 1,978,745, 3.5% of the next ILS 368,295 (about ILS 12,900) and 5% of the remaining ILS 1,652,960 (about ILS 82,600) [1]. The non-resident pays 8% on the whole price [1]. An oleh buying a single home pays much less than either. If you still own a house in the States, ask your lawyer whether it affects your status before you sign.

Tax when you sell

The Israeli side

Israel charges betterment tax (mas shevach) on the sale of real estate, generally 25% of the inflation-adjusted gain [5]. Israeli residents can often sell a single home tax-free, within limits. A foreign resident can claim a similar exemption only with Israel Tax Authority approval, which generally means showing you don't own a home in your country of residence, backed by paperwork from that country's tax authority [5]. For Americans who still own a house in New Jersey, that exemption is usually out of reach.

The US side

Uncle Sam taxes your worldwide gain, measured in dollars:

Section 121 works for a foreign home. Own the apartment and live in it for at least 24 months of the 5 years before the sale, and up to USD 250,000 of gain (USD 500,000 for most joint filers) is excluded [3]. Nothing limits it to US homes.
The foreign tax credit. Betterment tax is a tax on gains, so it goes on Form 1116 against US tax on the same gain [4]. Purchase tax and arnona aren't income taxes and don't count.
Above the cap. Tel Aviv prices are steep. If Israel exempts your single home, there's no Israeli tax to credit against US tax on gains above the exclusion.
Currency counts. Your dollar cost uses the rate when you bought and your proceeds use the rate when you sell. The shekel's swings over the last decade can turn a break-even shekel sale into a US gain, or a loss you can't deduct.

Your old place in New York

The 2-of-5-years clock keeps running. After more than three years away the exclusion is usually gone, depreciation from renting it out is taxed on sale either way, and New York can still tax the gain on New York property. Our guide to selling your US home after moving abroad has the details.

Renting it out

The Israeli side. Residential rent in Israel can be taxed under one of several tracks: a monthly exemption ceiling for residents, a 10% tax on gross rent, or regular income tax with deductions. Which track pays off depends on your rent, your other income and your Israeli residency status. Tel Aviv demand for long-term rentals is strong, but check building rules before trying short-term rentals.

The US side. Report the rent on Schedule E. A Tel Aviv apartment is used predominantly outside the United States, so you must depreciate it under the Alternative Depreciation System over 30 years, not the 27.5 years you'd use for a rental in Queens [6][7]. Israeli tax on the rent can go on Form 1116, though a 10% gross tax and the US net-income calculation don't always line up neatly.

Renting out the place back home instead? Our guide to rental income from a US property covers the stateside rules.

Which makes sense for whom

Making aliyah or staying long term. Buying in Tel Aviv can make sense, especially with olim purchase tax rates and the resident single-home exemption. Live in it two of the five years before you sell and Section 121 helps on the US side.
Retiring in Israel. Similar logic, but plan your estate across both countries: Israel has no inheritance tax today, while the US estate tax still reaches a Tel Aviv apartment.
Moving back in a few years. Rent in Tel Aviv and keep (or buy) stateside. A non-resident pays 8% going in and may face betterment tax going out.
Buying a vacation place from abroad. Budget for the 8% purchase tax, a lower loan limit and the betterment tax on sale.

A US expat tax preparer (or an Israeli lawyer) can check your situation before you sign.

Buying in Tel Aviv vs back home: what Americans really pay