Larger homebuyer tax breaks proposed for immigrants

The Ministry of Finance and the Ministry of Aliyah and Integration are formulating a proposal to reduce the rates of purchase tax for new immigrants and returning residents buying homes in Israel. The proposal is for an exemption on the purchase price of a single home up to NIS 2 million, and a 0.5% rate of tax thereafter, up to a ceiling to be determined.

The proposal under discussion is designed to give new immigrants and returning residents a tax benefit that exceeds the benefit given to Israeli residents buying a single home, who receive an exemption up to NIS 1.98 million, after which the following brackets and rates apply: NIS 1.98 million to NIS 2.34 million, 3.5%; NIS 2.34 million to NIS 6 million, 5%; NIS 6 million to NIS 20 million, 8%; NIS 20 million onward, 10%.

A Ministry of Finance source said, “The benefit of a 0.5% purchase tax rate is not meant for immigrants and returning residents buying homes for NIS 6 million or more, and so a ceiling will be set from which the regular purchase tax rates will apply.”

The low purchase tax rate is part of a package of benefits intended to compensate new immigrants and returning residents for the cancellation of the exemption from reporting of assets and income overseas for ten years from the date of their arrival in Israel. That exemption was cancelled because of pressure from the OECD, which warned that Israel would find itself on a blacklist of countries that fail to comply with international transparency rules.

Currently, new immigrants and returning residents pay 0.5% tax on the first NIS 1.9 million of the purchase price of property for residential or business purposes, and 5% on the amount above that.

Published by Globes, Israel business news – en.globes.co.il – on March 14, 2024.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2024.