Real Estate Purchase Tax - Olim May Now Have Greater Flexibility

A recent court decision may present a significant opportunity for new immigrants (olim) seeking to purchase new construction residential property in Israel while benefiting from reduced purchase tax rates. If you are considering, or have already made, a property purchase prior to making aliyah, this ruling may affect your eligibility for certain tax benefits—particularly when the property was purchased “off-plan” and construction was not yet completed.
We recommend reviewing your purchase timeline in light of this development.

Key Takeaway
The Jerusalem District Court ruled that, in certain cases, the “purchase date” for tax purposes should be considered the date of delivery of the apartment (i.e., when the buyer receives possession), not the date the purchase contract is signed. This interpretation may provide new immigrants additional time to make aliyah and still qualify for significant tax benefits.
While this ruling is limited to the specific case it addressed and is not legally binding across all jurisdictions, it sets a persuasive precedent and could support claims or appeals by others in similar situations.

Background: Tax Benefits Available to Olim and Returning Residents
Israeli law provides two key purchase tax benefits for individuals making aliyah or returning to Israel:
1. Aliyah Benefit: A reduced purchase tax for new immigrants buying a single residential property for their own use, if the purchase occurs within the period of 12 months before to seven years after aliyah.
2. Single Residence Benefit: A reduced purchase tax rate for Israeli residents purchasing their only home, including new immigrants and "veteran returning residents" (those who lived abroad for at least 10 years). Eligibility requires establishing tax residency within two years of the purchase date.
The interpretation of the term “purchase date” has historically been understood to mean the contract signing date. This court decision challenges that assumption.

The Case: A Shift in Interpretation
In the case in question, Bonnie Eisler, a 73-year-old U.S. citizen, signed a contract for an off-plan apartment in Beit Shemesh in September 2017. She completed her aliyah in December 2020. However, due to pandemic-related delays, the property was not delivered until January 2022.
Her application for the Single Residence Benefit was denied on the grounds that more than two years had passed since she signed the purchase agreement. Eisler challenged this, arguing that the two-year window should begin on the date the apartment was delivered—not when the contract was signed.
The court agreed with her position, ruling that when an apartment is purchased from a developer and not yet ready for occupancy, the timeline for determining eligibility should begin at delivery.

Practical Implications for Buyers
If you are planning to purchase—or have already purchased—an off-plan property before making aliyah, this ruling may support a broader interpretation of your eligibility window.
Based on the court’s reasoning, consider the following:
- Aliyah Benefit: You may still qualify if you make aliyah within 12 months after delivery, even if the contract was signed earlier.
- Single Residence Benefit: You may be eligible if you establish Israeli tax residency within 24 months of the delivery date, not necessarily within 24 months of contract signing.
These benefits can translate to substantial financial savings—potentially tens or hundreds of thousands of shekels.
Additionally, this ruling may open the door for prior buyers who were denied benefits due to similar delays to revisit their cases, possibly appealing or requesting tax refunds.

Important Caveats
Despite the positive outcome in this case, there are several limitations to be aware of:
- Not Binding Nationwide: The ruling was issued by the Jerusalem District Court and is not binding on other courts or the Israel Tax Authority in general.
- No Change in Law: This decision does not amend legislation; it is an interpretation that may still be challenged or appealed.
- Uncertain Application: The Tax Authority may continue applying its original interpretation unless a higher court (such as the Supreme Court) mandates otherwise.
Furthermore, not all delays—such as those related to developers or external circumstances—will necessarily be accepted as grounds for extended deadlines under the law. The nuances of each situation matter.

What You Should Do
We advise anyone in the following situations to consult a qualified Israeli tax or real estate attorney:
- You are purchasing an off-plan property and have not yet made aliyah.
- You purchased a property before aliyah, and the delivery was delayed.
- You were previously denied purchase tax benefits due to timing concerns.
- You are unsure whether your case qualifies for an exemption or refund.
Given the potential financial implications and the evolving legal landscape, individualized legal advice is strongly recommended. This ruling opens a door—but it must be approached with careful planning and documentation.

Real Estate Purchase Tax - Olim May Now Have Greater Flexibility

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