As of August 15, 2024, a significant amendment has come into effect, impacting the purchase tax paid by new immigrants buying residential property in Israel. The new rules apply to anyone whose official date of immigration (Aliyah) is August 15, 2024 or later. Those who immigrated before this date, but have not yet used their benefit, may choose between the old and the new tax benefit structures (see details below).
The amendment introduces three key changes:
- The tax discount itself is now substantially higher (see examples below).
- The requirement to physically reside in the apartment purchased with the benefit has been removed. This means eligible immigrants can use the benefit even if they don’t live in Israel.
- The new benefit is now only available if the purchased apartment is the immigrant’s sole property in Israel. If the person previously owned another property, it must have been sold within 18 months of purchasing the new apartment.
It’s important to note that the new rules are mandatory only for those who made Aliyah on or after August 15, 2024. Immigrants who received their status before that date can choose to apply either the old or the new tax rules. However, if a property has already been purchased under the old rules, it cannot be reassessed under the new ones.
How the rules worked before the amendment
Previously, new immigrants who were also Israeli tax residents could effectively purchase two residential properties with tax benefits — the first using the regular resident’s beneficial rate, and the second under the new immigrant benefit. The only condition: the immigrant had to actually live in the second property. Many of our clients took advantage of this option.
Unsurprisingly, this didn’t sit well with the Tax Authority. The benefit, originally intended to help new immigrants purchase their first home in Israel, was often being used by wealthier individuals to buy additional real estate.
To clarify: this loophole still exists for immigrants who received their status before August 15, 2024, but then the condition of actual residence in the apartment also still applies.
A quick look at the new tax savings
The updated rules significantly reduce the tax burden for immigrants purchasing a single, primary residence. For example, on a ₪3 million apartment (rates accurate as of the date of publication):
Before the amendment:
- New immigrant: ILS 60,536
- Israeli resident (owning only one home): ILS 45,538
(This still applies if the person immigrated before August 15, 2024 and chooses the old calculation method.)
After the amendment:
- New immigrant (sole residence): ILS 5,106
- Israeli resident (sole residence): no change
As before, the benefit can be used only once. If a new immigrant sells the first apartment purchased under the benefit and buys another, the second purchase will be taxed at the standard rate, depending on residency status.
Additional eligibility conditions
- The benefit is valid for up to seven years from the immigrant’s first entry into Israel, and even applies retroactively for one year before entry.
(That is, if someone bought an apartment within a year before immigrating and then made aliyah within that year, they may request a tax reassessment under the new rules.) - The benefit does not apply to property purchases exceeding ILS 20,180,564.
IMPORTANT: This article provides general information only and is not a substitute for legal advice. The author bears no responsibility for the use of this information without the guidance of a qualified attorney. All figures are accurate as of the date of publication.