Dear Clients, Colleagues and Friends,

A few days ago, a proposal was published to amend the purchase tax regulations regarding new immigrants.

The proposal intends to change the purchase tax liability in connection with the purchase of a residential apartment by a new immigrant.

Currently, a new immigrant who purchases a residential apartment for his use is entitled to a one-time purchase tax relief so that he will pay purchase tax according to the following brackets: up to an amount of NIS 1,988,090, a purchase tax of 0.5%, while above this amount, a purchase tax of 5% on the balance of the purchase amount of the apartment.

The existing law granted significant benefits to expensive apartments, while with regard to apartments at a relatively low purchase price, the relief was not significant and sometimes, with respect to the purchase of a first residential apartment in Israel, did not even exist at all.

It is now proposed to amend the purchase tax rules for new immigrants so that the relief provided to new immigrants who purchase an apartment at a relatively low price will be greater, while no relief will be provided at all for the purchase of expensive apartments. According to the proposal:

1. For apartments priced up to NIS 2.5million, new purchase tax brackets will apply so that no purchase tax will be paid up to a ceiling of NIS 1,978,475, and the remaining purchase amount will be subject to purchase tax at a rate of 0.5%.
2. For apartments priced between NIS 2.5 million and NIS 4 million, a purchase tax of 0.5% will apply on the entire price of the apartment.
3. No relief will be provided to a new immigrant who purchases a residential apartment for an amount exceeding NIS 4 million.

The law will not be changed in connection with the purchase of a business for a new immigrant.

The relief for immigrants for the purchase of land for the purpose of building an apartment or business will be canceled.

According to the proposal, the amendment shall not apply to the acquisition of real estate made prior to the entry into force of the amendment (“Effective Date”). In addition, immigrants who immigrated to Israel before the Effective Date may elect to have the old law apply to them even if the purchase of the land was made after the Effective Date.