This is from the professionals at Nefesh b’Nefesh. Contact them for further information or clarification. Contact us to purchase your new home!
Olim Chadashim are entitled to mortgage assistance and discounted purchase tax.
Mashkanta (Mortgage) Benefits
A special mortgage for Olim is available under the following conditions:
1. Granted up to 10 years after your Aliyah.
2. Provided as a loan with fixed rates (around 4-4.5%). Oleh rates should be carefully compared with the current non-Oleh interest rates prior to purchasing a home, as depending on market trends the non-Oleh track may offer lower interest rates.
3. Paid back in monthly payments, usually for a period of 20-28 years.
Because the amount of the mortgage is rather small, you may need additional sources of funding. It is wise to shop around for the best rates.
Who is eligible for a government housing mortgage?
1. Olim Chadashim (New Immigrants)
2. Ktinim Chozrim (Returning Minors)
3. Ezrachim Olim (Israeli Citizens born abroad)
Mortgage assistance is granted only if you meet the following criteria:
1. The individual must be “without housing,” which means that neither member of a couple owns an apartment, or part of an apartment in Israel.
2. Only available to Olim Chadashim who hold a Teudat Zakaut issued by a mortgage bank. (A Teudat Zakaut is an official document issued by Israel’s Ministry of Housing and Klita).
3. Those purchasing property in Israel before making Aliyah must make Aliyah within one year and still owe payments to the buyer equivalent to the mortgage received as an Oleh.
Mortgage received is based on a point system and will be determined with consideration of the following criteria:
1. Age/family status/family size – single, married, children
2. Numbers of years living in Israel
3. Length of service in the Israeli IDF
Please check the Misrad HaBinui v’Hashikun (Ministry of Housing) website and check their calculator for mortgages (in Hebrew): www.moch.gov.il
Go to Siyua B’Diyur (סיוע בדיור) and then to Ashaf HaSiyua (אשף הסיוע).
Mas Rechisha (Purchase Tax)
Anyone who purchases a property in Israel is obligated to pay a purchase tax, which is a percentage of the value of the home. As Olim Chadashim you are entitled to a discount. The amount you are taxed is based on the value of the asset and can amount to considerable sums of money.
All Olim Chadashim and anyone who resides in Israel on a temporary resident visa (A-1) are entitled to a reduction. A reduction in Mas Rechisha is available up to 7 years after your date of Aliyah. There is no extension of this 7 year period (unless the applicant served in the IDF).
There are two possible tracks that are available for Olim when purchasing a home.
Track One: Purchasing Home as Israelis or Tourists
Israelis and tourists pay the following percentages on Mas Rechisha. Please note that these percentages are calculated on a graduated basis according to the apartment’s price:
Up to 1,350,000 NIS – 0%
1,350,000 NIS – 1,601,210 NIS – 3.5%
Above 1,601,210 NIS – 5% tax
Track Two: Purchasing Home as Olim Chadashim
As Olim Chadashim, you will pay the following percentages on Mas Rechisha:
Up to 1,463,035 NIS 0.5% tax
Over 1,463,035 NIS 5% tax
Purchase Tax Rates (for homes purchased between 1/16/2011 and 1/15/2012)
|Sample House Values (NIS)||Purchase Tax – New Olim||Purchase Tax – Israelis||Purchase Tax – Tourists|
To calculate your Mas Rechisha, see this online calculator (Hebrew).
- If you are purchasing a property that is under 1,329,207 NIS in value, it is recommended that you purchase it as an Israeli and do not choose to exercise your “rights” to a purchase tax discount, since surprisingly, this ends up being significantly more expensive.
- If you are interested in purchasing a property as a tourist, we recommend that you consult with a real estate lawyer to establish what purchase tax rate you will be charged.
- Please note that if you are purchasing property that is above 1,463,035 NIS, you will still be entitled to the 0.5% reduction for the specific amount of 1,463,035 NIS, but the remaining cost of the property will be taxed 5%.
- A person who purchased an apartment prior making Aliyah and paid purchase tax in full can submit a request in order to get a reimbursement if making Aliyah within one year from the formal date of signing the contract.
- If you already own one property and you are interested in purchasing a second property, these rates do not apply.
- It is always recommended to consult with a lawyer to calculate how much your Mas Rechisha should be.