Purchase Tax for New Immigrants — What You Need to Know

If you have made aliyah to Israel in recent years, or are planning to immigrate and purchase a property (residential or commercial) — it's worth knowing what benefits you're entitled to.

Purchase tax relief for new immigrants - a significant benefit that is often not utilized properly.

Changes to Purchase Tax for New Immigrants

In August 2024, a significant amendment to the Purchase Tax (Mas Rechisa) Regulations for new immigrants (Olim Chadashim) came into effect, expanding the existing benefits. This change affects both how the benefit is granted and which types of properties it applies to. Many transactions taking place today are still being handled based on the old understanding of the rules, which can lead to paying more tax than necessary.

So what exactly changed?

The law now makes an explicit distinction between two scenarios:

1. Purchase of a residential apartment.

2. Purchase of a business premises (including an agricultural farm).

Each has a different benefit mechanism.

Purchasing a Residential Apartment — How Does the Benefit Work Today? (Regulation 12a of the Purchase Tax Regulations)

A new immigrant (Oleh Chadash) who purchases a residential apartment that is their sole property, and who meets the conditions set by law, enjoys a reduced purchase tax under a tiered structure:

Up to 1,978,745 NIS — no tax at all. From 1,978,745 NIS to 6,055,070 NIS — a reduced tax at a particularly low rate (0.5%).

From 6,055,070 NIS to 20,183,565 NIS — standard tax at a rate of 8%.

(Amounts are updated for 2024–2026)

In addition, there are important conditions:

The benefit is granted only once. There is a value cap on the transaction above which the benefit does not apply. There is also a time window within which the purchase must be made relative to the date of immigration.

What About Purchasing a Business Property? (Regulation 12 of the Purchase Tax Regulations)

The regulations separately address the purchase of business premises. Here too a benefit exists, but it is conditional on the property being used for a business in which the immigrant or a close relative is employed. And again, this benefit is also granted only once.

Applicability

For immigrants whose aliyah date was before the amendment came into effect (August 15, 2024), there is an option to choose — under certain conditions — whether to act according to the old or the new version of the regulations. This choice can have real financial significance, especially when dealing with a high-value transaction.

In Summary

As you can see, in real estate transactions, purchase tax (Mas Rechisha) is one of the most costly components of the deal. In some cases, the difference between correctly using the benefit and missing it can reach tens of thousands of shekels or more — since a mistake in identifying the property type (residential vs. commercial) can result in a higher tax liability than expected. Likewise, a transaction carried out close to the date of immigration requires careful scrutiny of the relevant timelines.

The purchase tax benefits for new immigrants still exist — but today they are granted in a different and clearer way, with a separation between residential apartments and business premises, and with restrictions that are not always understood by those who don't deal with these matters regularly. Before signing a purchase contract — especially if you are a new immigrant — it is strongly recommended to check in advance which benefit applies to you and in what manner.

The recent changes highlight how important it is to understand the updated mechanism — and not to assume that things have remained unchanged. In this case, we're talking about a significant benefit that is often not properly utilized.