Israel purchase tax for foreign residents and new immigrants (olim)

Purchase tax is paid by the buyer on the value of the home, in brackets: one part of the price is taxed at one rate and the next part at a higher one. The brackets for an Israeli resident buying their only home are lower than those for an additional home. The purchase is reported to the Tax Authority, and your lawyer files the report and calculates the tax.

The reduced single-home brackets are for Israeli residents. A foreign resident usually pays at the additional-home rates, even when it is the only home they own. The law treats a buyer as an Israeli resident if, within two years of the purchase, they become an Israeli resident for the first time or a veteran returning resident; if that is your plan, ask your lawyer how it applies to you.

The additional-home rates are currently set by a temporary provision that runs until 31 December 2026. If you expect to sign around that date, check what applies on the day you sign.

A new immigrant can get purchase tax relief on one home bought within a window that starts one year before aliyah and ends seven years after it. Since 15 August 2024 the relief applies only to a sole home, once, under a new bracket structure, and above a certain value there is no relief. Olim who arrived before the change may be able to choose the earlier route.

You apply to the Tax Authority with a dedicated form and proof of your status from the Ministry of Aliyah and Integration. Plan the timing of the purchase against your aliyah date in advance, with your lawyer.

The olim relief does not apply to returning residents. A veteran returning resident who becomes an Israeli resident within two years of the purchase may be treated as a resident for the single-home brackets, subject to conditions. The definitions of returning resident and veteran returning resident are technical; confirm your status with the Tax Authority or your lawyer.

The Tax Authority has a purchase tax simulator (in Hebrew). Enter the price, the purchase date and your status for an estimate. The final figure comes from the report your lawyer files, so before you commit to a price, ask your lawyer for a calculation for that specific purchase.