What purchase tax is, and why olim pay less
When you buy property in Israel you pay mas rechisha (מס רכישה, purchase tax) to the Israel Tax Authority. It is calculated in brackets, like income tax: each slice of the price is taxed at its own rate. Israeli residents buying their only home already get a generous scale. Olim get an even better one for a limited time after aliyah.
The olim scale changed on 15 August 2024. That day an amendment to the purchase-tax regulations added a new regulation 12A for olim buying a single home. The older regulation 12 now covers business premises, and in some cases olim who arrived earlier (see below). All figures in this article come from Tax Authority real-estate directive 1/2026, dated 18 January 2026, and from the regulations themselves.
The 2026 brackets for olim (regulation 12A)
An oleh buying a home that is their only residential apartment pays, for purchases from 16 January 2025 to 15 January 2028:
- 0% on the part of the price up to ₪1,978,745
- 0.5% on the part between ₪1,978,745 and ₪6,055,070
- 8% on the part between ₪6,055,070 and ₪20,183,565
- If the home is worth more than ₪20,183,565, regulation 12A does not apply at all and the regular rates apply.
The amounts are frozen. The 2025 Economic Arrangements Law stopped the yearly inflation update for 2025 to 2027, so the same figures apply until 15 January 2028.
How this compares with the regular first-home scale
An Israeli resident buying their only home (dira yechida, דירה יחידה) pays 0% up to ₪1,978,745, 3.5% up to ₪2,347,040, 5% up to ₪6,055,070, 8% up to ₪20,183,565 and 10% above that. Someone buying an additional home pays 8% up to ₪6,055,070 and 10% above. That additional-home rate is a temporary order that runs until 10 February 2027.
The oleh advantage is the long 0.5% band. It replaces the 3.5% and 5% bands of the regular scale. Some worked examples, rounded to the shekel:
- Home at ₪1,800,000: regular first home ₪0; oleh ₪0. Below the first threshold there is no difference.
- Home at ₪2,500,000: regular first home ₪20,538; oleh ₪2,606. Saving: about ₪17,900.
- Home at ₪4,000,000: regular first home ₪95,538; oleh ₪10,106. Saving: about ₪85,400.
- Home at ₪6,500,000: regular first home ₪233,886; oleh ₪55,976. Saving: about ₪177,900.
Who counts as an oleh, and the 7-year window
For this relief, an "oleh" is someone who entered Israel after 28 February 1963 and holds one of three documents: an oleh visa or an oleh certificate (teudat oleh) under the Law of Return, or an A1 "potential oleh" (oleh bekoach) visa or licence. The relief applies to a purchase made in the period that starts one year before you first entered Israel as an oleh and ends seven years after that entry.
- Months of compulsory military service or civil service are not counted in the seven years. They extend your window.
- Buying before aliyah: you must make aliyah within a year of the purchase. For a home under construction bought from a developer, the time it is under construction does not count, as long as you arrive no more than three years after the purchase and receive your oleh visa or another qualifying document within a year of buying.
- Note the difference from the mortgage aid: the purchase-tax window is 7 years, while the Housing Ministry eligibility loan runs for 15 years from oleh status.
"Only home" and the once-only rule
Regulation 12A applies only if the home is your single apartment, or a replacement home: you buy a new one and sell your previous only home within the legal deadline. In Israeli tax law a "single home" means your only residential apartment in Israel and the West Bank area. An apartment you own abroad is not counted. For this test, you, your spouse (unless permanently living apart) and your children under 18 are treated as one buyer. The law also treats as an Israeli resident someone who becomes a first-time resident within two years of the purchase.
- Regulation 12A relief is given only once per oleh.
- If a married couple buys together and only one spouse is an oleh, the purchase is treated as if the oleh bought it alone, so the whole purchase gets the oleh rate.
- If two unmarried buyers, one of them an oleh, marry within 12 months of the purchase, the partner gets back the extra tax they paid.
Arrived before 15 August 2024? You may have a choice
Olim whose aliyah date is before 15 August 2024 may choose the old version of regulation 12 instead: 0.5% up to ₪1,988,090 and 5% above, for a home you will live in, with no value cap and no only-home requirement. For a typical single home, 12A is far cheaper. For a ₪2,500,000 home the old route costs about ₪35,536, against ₪2,606 under 12A. The old route matters mainly if you already own an apartment in Israel. Then the alternative is the additional-home rate of 8% and 10%: on ₪4,000,000 that is ₪320,000, against about ₪110,536 under the old regulation 12. You can use the relief only once, so choose carefully.
How to claim it
- The buyer must file a purchase declaration with the Tax Authority's real-estate taxation office (misui mekarke'in) within 30 days of the purchase. Your lawyer normally files it.
- Claim the olim relief in the declaration and attach a request for partial exemption from purchase tax, a Population Registry extract showing your entry details, and a marriage certificate if you buy with a spouse.
- Before signing, use the Tax Authority's purchase-tax simulator. It has separate options for olim under regulation 12A and regulation 12.
- If your aliyah date is close to the edge of the window, get written confirmation of your status date before you sign the contract.
- The Ministry of Aliyah's Business.il centre gives free advice in several languages on reduced purchase tax for olim: *2994.
What it means for your budget
Purchase tax is paid from your own money, not from the mortgage. Your bank lends up to 75% of the price for a single home, so every shekel of tax comes out of your equity. In Ribit's simulator, enter the purchase tax you calculated as part of your upfront costs. For an oleh, that is often a few thousand shekels instead of tens of thousands.