A replacement apartment (the statute says "alternative apartment") is an apartment you bought before selling the home you live in, and that Israel's Real Estate Taxation Law will treat as the one that replaced the old home, as long as the old home is sold within a set window. Example: in 2025 you bought an apartment, declared it an investment, and paid purchase tax at the additional-home brackets. Now you are selling the home you live in. If the sale contract is signed inside the window, you can ask for that apartment to be treated, after the fact, as your replacement home, and get the difference back.
So is this actually possible? Yes, when two conditions hold, and you can check both today, before any meeting. First: the contract selling your home is signed inside a window counted from the day you bought the investment apartment. Second: until that purchase, the home was the only apartment you owned. What decides it is the signing date of the sale, not the move-out date and not the day the money lands. There is a second half: the appreciation tax (Israel's capital gains tax on real estate) on the home, with slightly different rules. More on that below.
What did you pay on the investment apartment, and how much of it can come back?
Not all of it. The difference comes back. On an additional home you pay purchase tax in 2026 from the first shekel, in brackets that start at 8%. On a single home the brackets start at zero: in 2026, 0% up to ₪1,978,745, 3.5% up to ₪2,347,040, and 5% up to ₪6,055,070. Those thresholds are frozen by statute through the end of 2027. Amending the assessment recomputes the tax at single-home brackets and refunds the difference.
Rough numbers: an apartment bought for ₪2,500,000. Purchase tax as an additional home: ₪200,000. The same apartment as a single home: about ₪20,500. The difference that comes back: about ₪179,500. Assuming that "the whole 8% comes back" is off by about ₪20,000, and not in your favor.
The difference is refunded with inflation adjustment and interest from the day you paid. The Real Estate Taxation Law says so; you do not have to ask for it separately.
Bottom line: the refund is the gap between additional-home brackets and single-home brackets, inflation-adjusted, with interest.
How long do you have to sign the sale of your home?
The window runs from the day you bought the investment apartment, and its length depends on that purchase date, not on the date you are reading this. If you bought between June 1, 2023, and May 31, 2025, you got 18 months, under a temporary provision in the Economic Efficiency Law. Buy on or after June 1, 2025, and you are back on the permanent rule: 24 months. Counting from the date you read this instead of the date you bought is off by a year.
| When you bought the investment apartment | Window to sell the home | Source |
|---|---|---|
| June 1, 2023 to May 31, 2025 | 18 months | Economic Efficiency Law for 2023 and 2024, temporary provision |
| From June 1, 2025 | 24 months | Real Estate Taxation Law, permanent rule |
| Bought from a developer | 12 months from the date possession was due under the contract | Real Estate Taxation Law |
What counts as a "sale"? The statute refers to the day the sale was made, and in practice that is the day you sign a binding sale contract. Not the move-out, not the last payment, not registration at the Land Registry (Tabu). Even a signed memorandum of understanding can count as a sale, so you negotiate with that date in mind.
Bottom line: 18 or 24 months depending on your purchase date, and the clock stops on the day you sign the sale of your home.
What did Operation Roaring Lion (2026) do to your window?
It added 3 months, even for people whose deadline fell after the war. The Extension of Periods and Deferral of Deadlines Law set a "second determining period" for Operation Roaring Lion: February 28 to May 31, 2026. The rule, as the Israel Tax Authority states it in Real Estate Taxation Directive 2/2026: if your window overlapped that period, in whole or in part, by even one day, your deadline moves to the later of two dates: your original deadline plus 3 months, or August 31, 2026.
"…falls wholly or partly (at least one day) within the second determining period, the last day of the defined period shall be deferred by three months…" — Real Estate Taxation Directive 2/2026, Israel Tax Authority, March 30, 2026 (unofficial translation)
A case from our files, no names and no amounts: a client bought an investment apartment on February 27, 2025 and paid full purchase tax. His window: 18 months, to August 27, 2026. That window overlaps the determining period, so the deadline moved to November 27, 2026. The directive itself gives a nearly identical example: purchase on April 30, 2025, original deadline October 31, 2026, extended deadline January 31, 2027. August 31, 2026 is the floor of the extension, not its ceiling.
The directive also notes that the Tax Authority's system freezes collection for the extra 3 months on its own, and that the assessing officer checks the conditions when the amendment request comes in, and that a request to amend an assessment should state that the deadlines are subject to the deadline-extension law. The Minister of Finance may extend the determining period again, up to 9 months in total, so before you give up, check whether another order has been issued.
Bottom line: your window is the purchase date plus 18 or 24 months, and if it touched February 28 to May 31, 2026, add 3 months.
And the appreciation tax on the home you are selling?
That is the second half, and its rules are different. The appreciation tax exemption on a residential sale goes to someone selling their only home. The Real Estate Taxation Law adds a presumption: you are treated as a single-home owner even with a second apartment, if that apartment was bought as a replacement for the home being sold, inside the same window, 18 or 24 months before the sale depending on when it was bought, and with the same 2026 extension.
Then there is the word "replacement." For purchase tax the statute itself speaks only of dates, though the Tax Authority's own Directive 2/2026 describes that route too as an apartment "bought as a replacement." For appreciation tax the words "as a replacement" are in the statute, and someone who expressly declared the purchase as an "investment" should be ready for the question. The examples the Tax Authority gives in Directive 2/2026 deal only with dates, but this is a point you check against the facts of the case before counting on an exemption. We check it before signing.
Other conditions for the exemption: you owned the home as a residence for at least 18 months; you did not use the same exemption in the 18 months before the sale; and the 2026 exemption ceiling is ₪5,008,000, with the portion above it taxed proportionally.
What if the window has already closed? Not all is lost. If the home was bought before January 1, 2014, the favorable linear calculation applies: the part of the gain attributed to the period up to January 1, 2014 is exempt, and only the remainder is taxed. In an older home, most of the gain accrued before 2014.
Bottom line: the exemption on the home runs through the same window, plus one more question: was the investment apartment bought as a replacement? Ask it before signing.
What about the new apartment you are buying?
It will be taxed at additional-home brackets, and that is not a mistake by the tax office. On the day you buy the new apartment you will still own the investment apartment, so the new one is not a "single home." The straightforward way to get single-home brackets on the new purchase: sell the home before you buy, so that on that day the investment apartment is your only apartment, and then sell the investment apartment within 24 months of the new purchase. If you want to keep the investment apartment, you pay on the new one as an additional home.
The planning still pays off: it brings back the difference on the investment apartment and unlocks the exemption on the home. Just do not build your budget on single-home brackets for the new apartment.
Bottom line: refund on the investment and exemption on the home, yes. Single-home brackets on the new one, only if the investment is sold.
How do you claim the refund, step by step?
- Sign the contract selling your home inside the window, and report the sale to the Tax Authority as usual.
- File a request to amend the purchase tax assessment on the investment apartment, within 4 years of the assessment date, attaching the home's sale contract and noting the signing date.
- If the 2026 extension applies to you, state in the request that the deadlines are subject to the deadline-extension law.
- The assessing officer reviews the conditions and issues an amended assessment; the difference comes back with inflation adjustment and interest from the day you paid.
- When you report the home's sale, claim the single-home exemption and state that the additional apartment was bought as a replacement.
What do you verify before signing?
Your questions, answered
I bought the investment apartment from a developer and possession was delayed. Where does the count start?
For an apartment from a developer the window is 12 months from the date possession was due under the contract. If possession was delayed for reasons outside your control, the count runs from the day you actually received it. For a purchase from a developer that is the window, not 18 or 24 months from the purchase date: if contractual possession is close to the purchase, the window can be shorter than usual. Work out the contractual date before you sign.
I signed the sale of my home a week after the deadline. Is there anything I can do?
First, redo the math. Many people counted 24 months instead of 18, or forgot that the 2026 extension adds 3 months even to a deadline that fell after August 31, 2026. If, after an exact count, the deadline really was missed, the refund on the investment apartment will not be granted, but the home itself still gets the favorable linear calculation if it was bought before 2014.
Do I have to sell the investment apartment to get the exemption on the home?
No. That is the whole point of the replacement apartment: you keep the investment apartment and are still treated as a single-home owner for the sale of the home. What is required is selling the home inside the window, and the condition that the investment apartment was bought as its replacement.
How much money actually comes back?
The difference between what you paid at additional-home brackets and what you would have paid at single-home brackets, plus inflation adjustment and interest from the day you paid. On an apartment of ₪2,500,000 that is about ₪179,500, not ₪200,000. Our calculator gives the tax at each set of brackets; the refund is the gap between the two results.
Can I do this myself, without a lawyer?
You can file the request itself on your own: a form, the sale contract, and a date. What gets complicated is everything around it: counting the window with the extension, an apartment from a developer, the "replacement" question on capital gains tax, and coordinating the refund, the exemption on the home, and the tax on the new apartment. We file the request as part of handling the sale and the purchase, in the same transaction.
Send us on WhatsApp the date you signed for the investment apartment, and we will send back the last day you can sign the sale of your home and still claim the refund.
So what do you do with that date?
Plan backward from it. The day you bought the investment apartment sets the last day to sign the sale of your home, and that day decides whether the difference comes back and whether the home sells tax-free. We handle resale apartment deals on both sides, the sale of your home and the purchase of the new one, and file the amendment request as part of the same transaction: two taxes, three dates, one amended assessment. That is how you sign with Rashket.
Sources: Real Estate Taxation (Appreciation and Purchase) Law, 5723-1963 · Economic Efficiency Law (Legislative Amendments for Achieving Budget Targets for 2023 and 2024), 5783-2023 · Extension of Periods and Deferral of Deadlines Law (Temporary Order – Swords of Iron) (Amendment), 5786-2026 · Real Estate Taxation Directive 2/2026, Israel Tax Authority, March 30, 2026. This article is general information, not legal advice; the refund and the exemption depend on the facts of each case.
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General information — not legal advice.