The same apartment, the same price, three different tax bills.
The gap between an oleh, a returning resident and a foreign resident buying an Israeli home is not a matter of luck. It follows from three variables: your status on the day of signing, exactly when you first entered Israel, and whether this is your only home. This page explains all three under Israeli law, with a citation at every point.
"Oleh" for purchase-tax purposes is not what most people assume
The olim purchase-tax relief uses its own definition of who counts as an oleh. It applies to a person who entered Israel as an oleh, and also to a person who entered on an A/1 temporary-residence permit — that is, including someone who has not yet completed the formal process. What it does not cover: a returning resident. That is the most expensive confusion in this field, and it ends in a revised assessment. The window: eligibility opens one year before your first entry to Israel and runs for seven years after it. In practice, you can buy before you actually make aliyah, and that is not a loophole — it is what the regulations say. But the count runs from actual entry, which makes that date something you need to know exactly, not approximately.
The brackets, the ceiling, and the 2024 restriction
On a residential apartment, an oleh pays 0% up to ₪1,978,745, 0.5% up to ₪6,055,070, and 8% above that — subject to a value ceiling of ₪20,183,565. Above the ceiling the relief does not apply. For a business asset the relief is separate and different: 0.5% up to ₪1,988,090 and 5% above. Three provisions that decide more than the numbers do: the relief is granted once for a residential property and once for a business property — not once a year, and not once per spouse. Since August 15, 2024, it has been limited to a home intended for the oleh's own residence, so an investment purchase does not fall within it. And the amounts themselves are frozen through January 15, 2028, meaning they will not be adjusted for inflation in the meantime.
You bought as foreign residents and then made aliyah — there is a mechanism
Section 9(c1c)(4)(b) of the Real Estate Taxation Law treats a purchaser as an Israeli resident if they become an Israeli resident for the first time, or a veteran returning resident, within two years of the purchase date. Meaning: your status on the day of signing is not necessarily the end of the story, if aliyah happens inside that window. What follows from this practically is not knowledge — it is timing. The signing date is the one thing in the transaction entirely within your control, and it is what starts the clock. So it is set together with the tax picture, not according to what suits the other side.
Ten years without tax on your foreign income
Section 14 of the Income Tax Ordinance grants a person who became an Israeli resident for the first time, and likewise a "veteran returning resident" — someone returning after ten consecutive years outside Israel — an exemption for ten years from tax on income produced or accrued outside Israel, or derived from assets outside Israel. It is one of the broadest reliefs in the Western world for someone changing countries, and it is why the timing of the day you become a resident is an economic decision, not just an administrative one. The adjustment year: someone who wants to test the move before locking in their status may request a year in which they continue to be treated as a foreign resident for tax purposes. Note two things — during that year there is no entitlement to an Israeli resident's tax credit points (Israel's personal tax credits), and the year is counted inside the ten exempt years rather than added to them. The filing deadline is short; verify it with the Ministry of Aliyah and Integration before relying on it. A point easily missed: the exemption concerns income from outside Israel. Rental income from an Israeli apartment is Israeli income and sits outside it.
Three routes on rental income, chosen again every year
Israeli law offers three routes for residential rental income, and the choice is made fresh each tax year — not once at the outset. The exemption route, under the Income Tax (Exemption from Tax on Residential Rental Income) Law: monthly income up to ₪5,654 (2026) is exempt, and above that the exemption phases out gradually until it disappears at ₪11,308. The 10% route, under section 122 of the Ordinance: a flat rate on gross rent, with no expense deductions. And the marginal-rate route, where expenses and depreciation are deducted and tax is paid at ordinary rates. Whether the exemption route applies to a foreign resident is not clear-cut and depends on the circumstances; in practice the practical route for foreign residents is usually the 10% one. Reporting is required either way, and a tenant may be required to withhold tax at source. The choice is made with an accountant, in advance.
And when you sell — two provisions worth knowing in advance
Section 49B(2) of the Real Estate Taxation Law conditions the exemption on the sale of a single residential apartment on, among other things, the seller having held it for at least eighteen months from the date of acquisition. This is why buying and selling over a short horizon in Israel is usually a poor decision tax-wise, even when the price looks good. Section 49A(a) adds a condition that applies to foreign residents only: they are treated as having no additional residential apartment only if they produce a certificate from the assessing officer in their country of residence stating that they hold no residential apartment there. It is a requirement that sounds technical and takes months to obtain — which is why it is started at the beginning of the process rather than at the end. And good news on inheritance: section 4 of the same law provides that "inheritance is not a sale" — the transfer to heirs is not itself a taxable event.
| Oleh | Veteran returning resident | Foreign resident | |
|---|---|---|---|
| Purchase tax, residential | 0% / 0.5% / 8% by bracket, up to a ceiling | Not eligible for the olim purchase-tax relief; ordinary brackets apply by number of homes | A home that is not their only one: 8% from the first shekel, 10% above ₪6,055,070 |
| How many times | Once residential, once business | — | — |
| Income tax on foreign income | Ten-year exemption, Section 14 of the Ordinance | Ten-year exemption, Section 14 of the Ordinance | Not taxed in Israel on foreign income |
| Selling a residential home | Ordinary rules, s.49B(2) | Ordinary rules | Also requires a certificate under s. 49A(a) |
Questions that keep coming up
01Can we buy before making aliyah and still get the relief?
Yes, you can buy before making aliyah and still get the olim purchase-tax relief. The eligibility window opens one year before your first entry to Israel and runs seven years after it, so buying early does not push you out of the reduced brackets. What changes is the practical side — financing, managing the property until you move, and who signs.
02Is the relief once in a lifetime or once per apartment?
Once for a residential property and once for a business property. Not once per spouse, and not once a year. Since August 15, 2024 it is also limited to a home intended for the oleh's own residence.
03What if I bought as a foreign resident and only made aliyah afterwards?
Section 9(c1c)(4)(b) treats a purchaser as an Israeli resident if they became an Israeli resident for the first time, or a veteran returning resident, within two years of the purchase. Which is why the signing date is set together with the tax picture rather than to suit the other side.
04Does the ten-year exemption cover rent from the Israeli apartment I bought?
No, the ten-year exemption does not cover rent from an Israeli apartment. Section 14 concerns income produced outside Israel. Rent from an Israeli property is Israeli income, taxed under one of three routes — exemption up to a ceiling, 10%, or marginal rates.
The brackets and amounts are in force through January 15, 2028 under the Real Estate Taxation (Purchase Tax) Regulations; updated July 2026. General information only, not tax advice — exact eligibility is reviewed for each transaction and each taxpayer.
A conversation with a real estate lawyer, wherever you are in the process.
An apartment you're buying or selling, a building entering renewal, or a contract waiting on a decision. Leave a name and a number and a senior lawyer on the team will call you back: we hear you out and tell you what the next step is — even when it isn't with us.