As part of the benefits a new immigrant receives, he is entitled to a reduced purchase tax rates. This in accordance to the real estate taxation regulations (betterment, sale and purchase)-1974, indicating that a new immigrant would pay a reduced purchase tax of 0.5% up to a limit of about 1.4 million NIS. Beyond that limited amount, he would pay 5% tax. The benefit will be granted to the new immigrant just as long as the apartment was purchased within 7 years from the first day he arrived to Israel for the first time or a year before he immigrated to Israel.

The reduced purchase tax, as indicated above will apply when purchasing (1) a residential apartment, or an apartment used for residential and business purpose together, so that the new immigrant can use the apartment to reside in it or to reside and work together in that apartment; (2) a business, including an agricultural farm, for the use of the new immigrant or his relative; (3)vacant ground under certain conditions…”. It should be noted that the regulation applies on whatever real estate right the new immigrant would purchase, within the benefit period, as mentioned above, meaning, once for a residential apartment and once for a business. In addition, it is important to emphasize that the regulation does not limit the benefit to a purchase of a “sole apartment”.

A sole apartment has a special and separated reference in the real estate taxation law, accordingly, an individual who purchase an apartment and it is his “sole apartment”, would be entitled to a significant relief on the purchase tax rates as follows: up to an amount of about 1.1 million NIS he would pay no tax. For any amount between 1.1 million NIS to 1.5 million NIS he would pay 3.5%. Beyond that amount he would pay 5%. This benefit is given to either an Israeli resident or a foreign resident.

In light of the above, an interesting outcome may arise in the following situation: the new immigrant purchase a sole apartment in Israel whilst he is considered as a foreign resident and later on purchase a second apartment in Israel. In regards to the first apartment, he would enjoy the reduced tax rates according to a “sole apartment”, as mentioned above (0%; 3.5%; 5%). In regards to the second apartment, he can use the purchased tax relief rates according to the regulations mentioned above. This, instead of paying the regular purchase tax rate on the second apartment: 3.5% up to a limit of about 923 thousands NIS and 5% above that limit amount. Note that in the event that the new immigrant decides not to purchase a second apartment, he can apply for a tax refund on the gap created between the tax he paid as a foreign resident and the tax he would have paid as a new immigrant. This pending to him immigrating to Israel within a period of one year since the first day he purchased the first apartment.