New OLIM will pay a reduced purchase tax – also on luxury apartments

The Finance Committee approved significant tax benefits for New OLIM when buying an apartment: exemption from purchase tax on the amount of up to NIS 2 million and a tax of only half a percent on the amount between NIS 2 million and NIS 6 million. Apartments over NIS 20 million will be excluded from the benefit

The Finance Committee of the Knesset today (Monday) approved significant benefits in the purchase tax for New OLIM who will buy apartments in Israel. The new tax rate, designed to encourage immigration to Israel in the shadow of the ongoing war and rising anti-Semitism in the world, is significantly lower than the purchase tax paid by veteran Israelis. This is an almost unprecedented tax benefit, which will result in the loss of millions of shekels in taxes to the state coffers – precisely when the budget deficit increases.

According to the new regulations, New OLIM will pay a purchase tax of only 0.5% on the part between about NIS 2 million and NIS 6 million of the amount of the apartment. This is a benefit also for purchasing large and expensive apartments. In doing so, the Finance Committee approved an amendment to the real estate taxation regulations, which refers to the benefits that New OLIM are entitled to when purchasing real estate in Israel.

According to the amendment, it appears that those who purchase a right to a single residential apartment will not pay tax for the part of the value that is up to the first level established in the Real Estate Taxation Law for purchase tax rates in the case of a single apartment – NIS 1,978,745 as of 2024, on the part of the value that exceeds the amount of the level up to the amount of 6 million According to the index in 2024, the New OLIM will pay a purchase tax of only 0.5% and on the part of the value above the amount of 6 million, according to the index of 2024, he will pay tax according to the regular purchase tax rates set for the purchase of a single apartment. It should be noted that the benefit in question will not be granted, if the value of the right sold is in luxury apartments that are worth more than NIS 20 million, according to the 2024 index.

The amendment to the regulations is intended, as mentioned, to improve the tax benefit given to New OLIM. Until the amendment was approved, New OLIM paid a purchase tax of 0.5% on the part of the value up to the first level, and 5% above the first level, whether it was a single residential apartment or an additional apartment. This situation has so far created a reality in which the benefit did not benefit OLIM who purchased a single apartment, and on the other hand, a significant benefit was created for OLIM who purchased an additional apartment, and this is contrary to the government’s policy of increasing the purchase tax burden on investors to bring down housing prices.

Now the benefit has been amended so that OLIM who purchases a single apartment will pay a reduced tax – and OLIM who purchases an additional apartment will pay the normal tax rates. However, it was determined that OLIM who purchases a right in a business will continue to pay the reduced tax rates that were customary until now. It was further determined that those who immigrated to Israel before the commencement of the regulations may choose to have the provisions of the regulations apply to them as they were written before the amendment or the provisions of the law as they were written after the amendment, according to his choice. However, it appears that a person who purchased a residential apartment to which the provisions of the regulations applied as they were drafted before the amendment, will not be able to request that the provisions of the law be applied to them as they were drafted after the amendment, to avoid doubling benefits.

Finance Minister Bezalel Smotrich said today that “the State of Israel embraces the New OLIM. Especially at this time, we as a country need to do everything possible to make it easier for OLIM from around the world who are returning home. Today we took another important step for the sake of the OLIM and the State of Israel.

Minister of Aliyah and Integration Ofir Sofer, welcomed the approval of the measure, saying: “I thank the Minister of Finance, Bezalel Smotrich, and the Chairman of the Finance Committee, MK Moshe Gafni, for their important assistance in passing the regulation and their commitment to the OLIM.”

“This is news that will help many OLIM adapt to the country and encourage those interested in making Aliyah decide to come to Israel. Since the start of the war, immigration to Israel has continued, and interest is increasing. The Ministry of Aliyah and Integration is working tirelessly to ease the integration of OLIM in various fields, including housing assistance, Hebrew studies, community support, and academic studies.”

The content of this article is designed to provide the reader with general information and not to serve as legal or other professional advice for a particular transaction