Purchase Tax Benefits for Olim Buying a Home in Israel
Making Aliyah and planning to buy a home in Israel? You may qualify for significantly reduced purchase tax -even if you buy before moving.
Rules introduced on August 15, 2024 improved the purchase tax benefit for eligible Olim buying their only home in Israel. Here is what you need to know.
How much purchase tax will you pay?
Eligible buyers pay tax according to the following brackets:
Up to NIS 1,978,745 ................................................ - 0%
Above NIS 1,978,745 and up to NIS 6,055,070 ...... - 0.5%
Above NIS 6,055,070 and up to NIS 20,183,565 .... - 8%
Each rate applies only to the portion of the price within that bracket. These thresholds are currently in effect through January 15, 2028.
If the property costs more than NIS 20,183,565, the Oleh benefit does not apply to the purchase at all. Tax is then calculated under the otherwise applicable rules.
Who qualifies?
You must meet the legal definition of an Oleh, and the purchase must qualify under the rules for a single residential property in Israel.
The residential Oleh benefit is available once only. Previous use of the Oleh benefit, your immigration status and any existing property ownership should therefore be checked before signing.
Can you buy before making Aliyah?
Yes. The benefit generally applies to purchases made:
Up to one year before Aliyah; or
Within seven years after Aliyah.
For a home purchased off-plan or during construction, the pre-Aliyah period may extend to up to three years, subject to specific conditions. These include obtaining a qualifying immigration-status document within one year of purchase. The construction period and the seller’s obligation to complete the home also matter, so the extended period should not be assumed to apply automatically.
What changed in 2024?
The new rules introduced a tax-free first bracket and a reduced rate of just 0.5% on the next portion of the price. They also removed the previous requirement that the purchased home be used as the Oleh’s own residence.
Olim who immigrated before August 15, 2024 may be able to choose the previous rules instead, subject to eligibility. Comparing the available options can help determine which treatment is more beneficial.
Planning your purchase
Buying a home and making Aliyah often happen alongside each other. Checking your eligibility and timing before signing can help you understand your tax liability and avoid unexpected costs.
Our office advises Olim and international buyers on property purchases in Israel, including purchase tax eligibility and the legal aspects of the transaction. Contact us to discuss your plans.
Moshe Binyamini - Law Firm & Notary
Contact at:
[email protected]
This article provides general information only and does not constitute legal or tax advice. Eligibility and tax liability depend on your individual circumstances and the law applicable to your purchase.
