Israel has long welcomed Olim Chadashim with open arms, and recent changes to the country’s purchase tax laws aim to make the transition even easier. The Knesset Finance Committee has approved amendments to the rate of purchase tax rates for olim purchasing their first home in Israel.
What’s Changed with purchase tax rates for Olim?
Previously, olim received a reduced purchase tax rate of 0.5% on the first portion of their home’s value, regardless of whether it was their first or an additional property. However, this created an unintended advantage for those buying multiple properties, contradicting government efforts to curb a real estate bubble.
The new amendment addresses this issue by differentiating between first-time and subsequent home purchases for olim.
First-Time buyers: Olim purchasing their first property in Israel will now enjoy an even greater benefit. They will be exempt from paying purchase tax on the first ₪1,978,745 (as of 2024) of their home’s value. And on the remaining value up to ₪6 million, a reduced tax rate of 0.5% will apply. But standard purchase tax rates will apply to any value exceeding ₪6 million.
Subsequent buyers: Olim purchasing additional properties will no longer receive the reduced tax rate and will pay the standard purchase tax rates applicable to all Israeli citizens.
Why These Changes Matter
These amendments are designed to encourage aliyah and support new immigrants in establishing their lives in Israel. By reducing the purchase tax rates for olim on their first purchase, the government aims to make homeownership more accessible for olim and contribute to a more stable housing market.
Example:
Let’s say an oleh purchases their first home in Israel for ₪4 million. Under the new regulations, they would be exempt from paying purchase tax on the first ₪1,978,745. Then on the remaining ₪2,021,255 they would only pay a 0.5% purchase tax.
So, the total purchase tax payable would be: ILS 10,106
Some more points to note:
- These benefits do not apply to properties valued over ₪20 million.
- Olim who made aliyah before these amendments took effect can choose to apply either the old or new regulations.
- The reduced tax rate for business property purchases by olim remains unchanged.
The Israeli government’s commitment to supporting new immigrants is evident in these updated purchase tax regulations. If you’re an oleh considering buying your first home in Israel, these changes could make a significant difference in your financial journey.
