To attract new immigrants, the Knesset Finance Committee has approved changes to tax benefits, making it more affordable for first-time home buyers to settle in Israel.
Last week, the Finance Committee amended property tax benefits for new immigrants, or olim, exempting them from paying purchase taxes on the first NIS 1.98 million ($515,000) of a home’s value bought in 2024. Any amount above that, up to NIS 6 million, will be taxed at a reduced rate of 0.5%, down from the previous 5%. Purchases above NIS 6 million will be taxed at the standard rate for Israeli citizens.
Buyers of high-end residences valued over NIS 20 million will not receive the tax benefit.
This amendment provides tax relief for new immigrants purchasing homes between NIS 2 million and NIS 6 million but removes the tax discount for additional real estate purchases.
Finance Minister Bezalel Smotrich emphasized the importance of this move during the ongoing conflict with Hamas, stating that the country needs to support new immigrants returning home. Israel is preparing for an expected increase in Jewish immigration due to rising antisemitism globally since the October 7 attacks by Hamas terrorists, which killed nearly 1,200 people and took 251 hostages, igniting the Gaza war. Between January and May 2024, over 11,000 new immigrants arrived in Israel under the Law of Return.
Aliyah and Integration director-general Avichai Kahane highlighted the significant opportunity as many families consider immigrating to Israel amid rising antisemitism.
Previously, new immigrants paid a purchase tax of 0.5% on the first NIS 1.98 million and 5% on the remaining property value when buying a home or an additional real estate asset. Israeli first-time homebuyers are exempt from paying tax on the first NIS 1.98 million, with a standard rate of 3.5% for the next NIS 370,000, 5% up to NIS 6 million, 8% above NIS 6 million, and 10% above NIS 20 million.
Data presented at the Knesset Finance Committee showed most new immigrants forgo the purchase tax benefit when buying a home priced up to NIS 6 million, opting for standard tax rates for Israeli residents. In 2023, only 66 new immigrants out of tens of thousands used the benefit.
Following the amendment, a new immigrant buying a sole property for residential use costing NIS 4.1 million will pay about NIS 10,000 in purchase tax, compared to about NIS 100,000 for an Israeli. For a property priced at NIS 5.6 million, a new immigrant will pay about NIS 20,000 in tax compared to about NIS 200,000 for Israelis.
Under the new amendment, immigrants will not receive a purchase tax discount for buying multiple properties and will pay the standard tax rates applicable to all Israeli citizens.
The government stated that the previous significant tax break for new immigrants purchasing additional properties contradicted its policy of increasing the tax burden on real estate investors to reduce high housing prices.