Making Aliyah—immigrating to Israel—is a significant life decision that comes with numerous benefits designed to ease your transition to life in the Jewish state. Among these are substantial real estate-related advantages that can make purchasing your first home in Israel more affordable. This guide explores these benefits in detail, providing clear information on eligibility requirements, application procedures, and strategic considerations for maximizing your benefits.
Tax Reductions on Property Purchase
Purchase Tax (Mas Rechisha) Benefits
New immigrants (Olim Chadashim) receive significant reductions on purchase tax when buying property in Israel. This benefit is one of the most substantial financial advantages available to new immigrants.
Standard Purchase Tax Rates in Israel (as of April 2025):
- First property bracket (up to 1,949,745 NIS): 0%
- Second bracket (1,949,745 to 2,301,225 NIS): 3.5%
- Third bracket (2,301,225 to 5,940,140 NIS): 5%
- Fourth bracket (5,940,140 to 9,030,550 NIS): 8%
- Fifth bracket (above 9,030,550 NIS): 10%
Olim Benefit: As a new immigrant, you qualify for reduced purchase tax rates on residential property:
- For property valued up to 2,048,532 NIS: 0.5% (compared to standard rates)
- For property value above 2,048,532 NIS: Regular tax rates apply to the amount exceeding this threshold
Benefit Calculation Example: For a property valued at 3,000,000 NIS:
- Standard buyer would pay approximately 103,210 NIS in purchase tax
- New immigrant would pay only 15,085 NIS (0.5% on first 2,048,532 NIS + standard rates on remainder)
- Total savings: 88,125 NIS (approximately $24,000)
Eligibility Period:
- This benefit is available from the date of Aliyah until 7 years after your immigration date
- The benefit can be claimed anytime during this period, but only once
- You must not have owned property in Israel before making Aliyah
Documentation Required:
- Teudat Oleh (immigrant certificate)
- Teudat Zehut (Israeli ID card)
- Purchase agreement
- Declaration form certifying this is your first property purchase in Israel (available from the Israel Tax Authority)
Application Process:
- When registering the property purchase with the Tax Authority, submit your Teudat Oleh along with the purchase contract
- Complete Form 7013 (Declaration for Purchase Tax Reduction)
- Submit through your real estate attorney or directly at the local Misui Mekarke’in (Land Taxation) office
- The reduced tax rate will be calculated automatically when you report the transaction
Important Restrictions:
- This benefit applies to one property purchase only
- The property must be for residential use (not for investment)
- If you sell the property within 5 years of purchase, you may be required to repay a portion of the tax benefit
- The benefit cannot be combined with other purchase tax reductions for first-time homebuyers
Mortgage Benefits for New Immigrants
Special Mortgage Programs
The Israeli government, through the Ministry of Construction and Housing (Misrad HaShikun), offers special mortgage programs for Olim Chadashim.
Government-Subsidized Mortgage (Mashkanta Mesubedet):
- Eligible Olim can receive a subsidized mortgage with favorable terms
- Interest rates are typically 0.5% to 1.5% lower than standard market rates
- Loan terms can extend up to 30 years (compared to standard 20-25 years)
Maximum Loan Amounts (as of April 2025):
- Single Oleh: Up to 300,000 NIS
- Married couple without children: Up to 460,000 NIS
- Married couple with one child: Up to 560,000 NIS
- Each additional child: Additional 30,000 NIS
- Single-parent family: Additional 40,000 NIS per child
Supplementary Commercial Mortgage:
- Most Olim combine the government-subsidized portion with a standard commercial mortgage
- Banks often offer special mortgage tracks for Olim that complement the government portion
- Typical combined loan-to-value (LTV) ratio can reach up to 75% of the property value
Eligibility Requirements:
- Must be within 15 years of making Aliyah
- Must not have utilized more than 75% of your “zchuyot” (immigrant rights)
- Must be purchasing your first property in Israel
- Must meet income criteria established by the Ministry:
- Minimum income: 7,500 NIS monthly for a couple
- Maximum income: 20,500 NIS monthly for eligibility for full benefits
- Income above the maximum reduces the benefit amount proportionally
Application Process:
- Obtain a “Tehudat Zakaut” (Certificate of Eligibility) from the Ministry of Construction and Housing
- Apply online through the Ministry website or in person at a housing office
- Processing typically takes 2-3 weeks
- Submit the certificate to an approved mortgage bank (most major Israeli banks participate)
- Complete the bank’s standard mortgage application process:
- Income verification (3-6 months of bank statements)
- Property appraisal
- Credit check (difficult for new immigrants with limited credit history in Israel)
- The bank will calculate your total eligibility combining both government and commercial portions
Strategic Considerations:
- Some banks offer more favorable terms for the commercial portion to Olim with the government certificate
- The government portion typically has a fixed interest rate while the commercial portion may be variable
- Consider consulting with multiple banks as terms can vary significantly
- Many Olim prefer to work with English-speaking mortgage consultants who specialize in immigrant mortgages
Military Service Enhancement
If you or your children serve in the IDF after making Aliyah, additional mortgage benefits may be available:
- Enhanced loan amounts (approximately 25% increase)
- Extended eligibility period (up to 10 years after completion of service)
- Potentially lower interest rates on the government portion
Property Tax Exemptions (Arnona)
Municipalities across Israel offer property tax reductions to new immigrants, though the specific benefits vary by location.
Typical Arnona Reductions:
- 90% reduction for the first year of ownership
- 75% reduction for the second year
- 50% reduction for the third year
- 25% reduction for the fourth year
Regional Variations:
- Jerusalem: Up to 90% reduction for first 12 months, then 75% for next 12 months
- Tel Aviv: Up to 80% reduction for first 12 months, then 60% for next 12 months
- Haifa: Up to 90% reduction for first 24 months, then 50% for next 12 months
- Beer Sheva: Up to 90% reduction for up to 36 months (more generous for peripheral areas)
- Netanya: Up to 70% reduction for first 12 months, then 40% for next 12 months
Eligibility Period:
- Available during the first 12-48 months after making Aliyah (varies by municipality)
- The benefit period begins from your official Aliyah date, not from the property purchase date
- If you purchase a property during your fourth year after Aliyah, you might only receive a partial benefit
Application Process:
- Apply directly through your local municipality’s Arnona department
- Submit required documentation:
- Teudat Oleh (immigrant certificate)
- Teudat Zehut (Israeli ID card)
- Property ownership documents or rental agreement
- Completed application form (available from the municipality)
- Applications typically must be renewed annually
- If renting, you’ll need your landlord’s cooperation to transfer the benefit to you
Important Considerations:
- The benefit applies to a reasonable living space based on family size (typically 70-100 square meters for a couple)
- Space exceeding the standard allocation may be charged at the full rate
- Commercial areas within the property don’t qualify for the reduction
- You must actually reside in the property to claim the benefit
- If you leave Israel for more than 6 consecutive months, the benefit may be suspended
Housing Grants and Rental Assistance
Ministry of Aliyah and Integration Support
New immigrants may qualify for housing assistance programs that can help with rental costs while you save for a property purchase.
Rental Assistance (Siua B’schar Dira):
- Monthly rental subsidies for eligible Olim
- Amounts vary based on family size, income level, and location:
- Single Oleh: 800-1,200 NIS monthly
- Couple without children: 1,000-1,500 NIS monthly
- Family with children: 1,200-2,000 NIS monthly
- Elderly Olim: Up to 3,000 NIS monthly
- Typically provided for the first 5 years after Aliyah (first year: 100%, second year: 80%, etc.)
- Higher amounts available in designated national priority areas
Application Requirements:
- Must earn below a specified income threshold (varies by family size)
- Must provide a valid rental contract
- Must not own property in Israel
- Must apply within the first 12 months after Aliyah for maximum benefit
Housing Grants:
- One-time grants for qualifying Olim purchasing their first home
- Grant amounts vary based on family composition and socioeconomic factors:
- Single Oleh: Up to 40,000 NIS
- Couple without children: Up to 60,000 NIS
- Family with children: Up to 100,000 NIS
- Additional 25% available in national priority areas
- Must be used within 10 years of making Aliyah
- Grants are generally non-refundable and do not need to be repaid
Combined Benefits Strategy: Many Olim follow this strategic approach:
- Utilize rental assistance for the first 3-5 years after Aliyah
- Build credit history and stable employment during this period
- Save for a down payment while maintaining eligibility for purchase benefits
- Purchase property before the 7-year tax benefit expires
- Apply for available housing grants to offset purchase costs
Special Population Benefits
Elderly Olim (over 65):
- Enhanced rental assistance (up to 95% of actual rent)
- Extended eligibility period (potentially lifelong for low-income elderly)
- Access to subsidized senior housing projects
- Special mortgage programs with reduced down payment requirements
Single-Parent Families:
- Additional rental assistance (approximately 20% above standard rates)
- Priority access to public housing in some regions
- Enhanced mortgage terms with lower interest rates
- Higher grant amounts for property purchase
Olim from Areas of Distress:
- Immigrants from regions designated as areas of distress (such as conflict zones) may receive enhanced benefits
- Up to 50% additional funding across all housing programs
- Extended eligibility periods
- Priority processing for applications
Regional Incentive Programs
National Priority Areas
The Israeli government designates certain regions as National Priority Areas (Ezor Leumi Adifut), offering enhanced benefits to encourage settlement.
Enhanced Benefits in Priority Areas:
- Purchase tax reductions extended by 2 additional years (9 years total)
- Mortgage subsidies increased by 25-40%
- Rental assistance increased by 20-30%
- One-time settlement grants of 15,000-40,000 NIS
- Property tax (Arnona) reductions extended to 5-7 years
Notable Priority Regions:
- Northern Galilee
- Negev Desert towns
- Judea and Samaria settlements
- Development towns including Sderot, Kiryat Shmona, and Dimona
- Certain neighborhoods in Jerusalem
Strategic Considerations:
- Property values in these areas are typically 30-50% lower than central regions
- Future value appreciation may be slower than central areas
- Employment opportunities may be more limited
- Community services (schools, medical care) may vary significantly
- Transportation infrastructure may be less developed, requiring car ownership
City-Specific Programs
Many municipalities offer additional benefits beyond the standard national programs:
Jerusalem:
- “Young Families” program offering additional grants of 10,000-30,000 NIS
- Special mortgage track with the Jerusalem Municipality as guarantor
- Reduced municipal taxes for up to 5 years in certain neighborhoods
- Development subsidies for renovating older properties
Beer Sheva:
- “Desert Capital” program offering land purchase subsidies
- Employer housing assistance programs with major institutions (Ben-Gurion University, Soroka Hospital)
- Municipal renovation grants for older neighborhoods
- Community integration support services
Haifa:
- “Haifa Returns to the Sea” urban renewal subsidies
- High-tech employee housing benefits
- University-affiliated housing projects with special terms
- Discounted land lease rates in developing neighborhoods
Practical Tips for Navigating Real Estate Benefits
Documentation Requirements
To claim any of these benefits, you’ll need to provide:
- Teudat Oleh (immigrant certificate)
- Teudat Zehut (Israeli ID card) with current address
- Proof of property ownership or rental agreement
- Income verification documents (pay stubs, employment contracts)
- Previous tax returns (if applicable)
- Bank statements (typically 3-6 months)
- Marriage certificate and children’s birth certificates (if applicable)
- Military service documentation (if applicable)
Document Authentication:
- Most documents must be originals or certified copies
- Foreign documents typically require apostille certification
- Hebrew translations may be required for non-Hebrew documents
- Keep multiple copies of all documents
- Consider creating a digital archive of all documents
Timing Considerations
- Optimal Purchase Window: Years 3-6 after Aliyah to maximize purchase tax benefits while establishing income stability
- Benefit Stacking: Coordinate your purchase to maximize the overlap of various benefits
- Deadline Awareness: Mark key dates on your calendar to avoid missing application windows
- Renewal Requirements: Many benefits require annual reapplication
- Tax Year Planning: Align property purchases with the Israeli tax year (January-December) for optimal tax benefits
Benefit Timeline Example: For an Oleh family arriving in January 2025:
- Jan 2025 – Jan 2026: Maximum rental assistance (100%)
- Jan 2025 – Jan 2029: Eligibility for Arnona reduction
- Jan 2025 – Jan 2032: Eligibility for purchase tax reduction
- Jan 2025 – Jan 2040: Eligibility for government-subsidized mortgage
- Jan 2025 – Jan 2035: Eligibility for housing grants
Common Pitfalls to Avoid
Premature Purchase:
- Buying property immediately after Aliyah before establishing credit history
- Difficulty obtaining mortgage approval without Israeli income history
- Risk of overpaying due to unfamiliarity with local markets
Benefit Forfeiture:
- Missing application deadlines
- Failing to renew benefits annually
- Not maintaining required documentation
- Extended absence from Israel affecting eligibility
Inappropriate Property Selection:
- Purchasing property that doesn’t qualify for specific benefits
- Buying in areas with limited resale potential
- Underestimating additional costs (maintenance, property taxes)
- Overlooking community fit and cultural integration factors
Working with Professionals
Recommended Expert Assistance
Navigating Israel’s real estate market and benefit systems can be complex. Consider working with:
Real Estate Attorney (Orech Din):
- Specializing in Olim rights and real estate transactions
- Typical fees: 1-1.5% of property value + VAT
- Services include:
- Contract review and negotiation
- Title verification
- Tax benefit applications
- Registration of property rights
- Mortgage document preparation
Mortgage Consultant:
- Independent advisors familiar with immigrant benefit programs
- Typical fees: 0.5-1% of mortgage amount or fixed fee of 3,000-8,000 NIS
- Services include:
- Comparing offers from multiple banks
- Structuring optimal mortgage components
- Maximizing government subsidies
- Preparing application documentation
- Guiding you through the approval process
Accountant/Tax Advisor:
- Expert in immigrant tax benefits and real estate taxation
- Typical fees: Hourly (400-700 NIS) or package rates (2,000-5,000 NIS)
- Services include:
- Tax planning for property purchase
- Calculating potential tax savings
- Future property tax planning
- Assistance with tax filings related to property
Real Estate Agent (Metavech):
- Look for agents specializing in Olim clients
- Typical fees: 2% + VAT from each party (buyer and seller)
- Services include:
- Property search based on benefit eligibility
- Negotiation with understanding of Olim constraints
- Introduction to neighborhoods suitable for immigrants
- Guidance on local property values and trends
Government Resources
Ministry of Aliyah and Integration:
- Personal absorption counselors assigned to each Oleh
- Regional offices offering face-to-face consultations
- Hotline: *2994 (within Israel) or +972-3-9733333 (international)
- Website: www.moia.gov.il (with information in multiple languages)
Ministry of Construction and Housing:
- Housing assistance centers in major cities
- Online application portal for housing benefits
- Subsidized mortgage qualification testing
- Hotline: *5442 (within Israel)
Israel Tax Authority:
- Specialized department for new immigrant benefits
- Pre-ruling service for complex tax situations
- Online calculators for purchase tax estimation
- Regional offices offering in-person consultations
Case Studies: Real-World Benefit Scenarios
Case Study 1: Young Single Professional
Profile:
- 28-year-old software engineer
- Making Aliyah from the United States
- Annual income: 180,000 NIS
Benefit Strategy:
- First 2 years: Rent while establishing employment history
- Rental assistance: ~1,000 NIS monthly
- Arnona reduction: ~70% on rental apartment
- Year 3: Purchase 1.8M NIS apartment in Ra’anana
- Purchase tax savings: ~60,000 NIS
- Government mortgage: 300,000 NIS at 2.1% fixed interest
- Commercial mortgage: 1.05M NIS at market rates
- Total monthly payment: ~5,500 NIS
- Property tax reduction: ~6,000 NIS annually for 2 years
Total Benefit Value: Approximately 150,000 NIS over 5 years
Case Study 2: Family of Four
Profile:
- Married couple with two children
- Making Aliyah from France
- Combined annual income: 250,000 NIS
Benefit Strategy:
- First year: Rent in Jerusalem
- Rental assistance: ~1,800 NIS monthly
- Arnona reduction: ~90% on rental apartment
- Year 2: Purchase 2.5M NIS apartment in Jerusalem
- Purchase tax savings: ~82,000 NIS
- Housing grant: 80,000 NIS
- Government mortgage: 620,000 NIS at 1.9% fixed interest
- Commercial mortgage: 1.25M NIS at market rates
- Property tax reduction: ~12,000 NIS annually for 3 years
Total Benefit Value: Approximately 290,000 NIS over 5 years
Case Study 3: Retired Couple
Profile:
- Couple in their 60s
- Making Aliyah from the UK
- Fixed retirement income: 140,000 NIS annually
Benefit Strategy:
- First 2 years: Rent in Netanya
- Enhanced elderly rental assistance: ~2,500 NIS monthly
- Arnona reduction: ~90% on rental apartment
- Year 3: Purchase 1.9M NIS apartment in Ashkelon (priority area)
- Purchase tax savings: ~65,000 NIS
- Housing grant: 75,000 NIS (enhanced due to priority area)
- Government mortgage: 500,000 NIS at 1.8% fixed interest
- Commercial mortgage: 900,000 NIS at market rates
- Extended property tax reduction: ~8,000 NIS annually for 5 years
Total Benefit Value: Approximately 320,000 NIS over 7 years
Conclusion
The real estate benefits provided to Olim Chadashim represent a significant financial advantage that can substantially reduce the cost of purchasing your first home in Israel. By understanding these benefits and planning strategically, you can maximize the value of these programs during your eligible period.
The key to success lies in careful planning, timing your property purchase optimally, and working with knowledgeable professionals who understand the unique benefits available to new immigrants. Remember that while these benefits can significantly reduce costs, they should be considered alongside other important factors such as location preferences, community fit, and long-term financial planning.
For the most current information and personalized guidance, it’s advisable to consult with the Ministry of Aliyah and Integration or a professional specializing in Olim benefits.
Note: All monetary figures and percentage rates are current as of April 2025 but are subject to change. Always verify the latest figures with the relevant government agencies before making financial decisions.
