Purchase Tax for Olim: Regulation 12 vs 12A — the Full Comparison

A new immigrant (Oleh) buying a single home to live in can pay 0% purchase tax up to NIS 1,978,745 and only 0.5% on the portion above it (up to NIS 6,055,070) under Regulation 12A. On a NIS 4.1 million home that means about NIS 10,600 instead of roughly NIS 100,500 on the regular track. The older Regulation 12 (0.5% up to NIS 1,988,090, 5% above) still exists — and for investment property or business premises it is the only Oleh track available. Here is how the two compare, who gets to choose, and where the traps are.

Why are there two Oleh tracks at all?

For decades, Olim used Regulation 12 of the purchase tax regulations: a flat 0.5% up to a threshold and 5% above it. But once Israel's regular single-home track came to include a full exemption up to roughly NIS 2 million (see the 2026 purchase tax brackets), the old Oleh rate — charged from the first shekel — often left an Oleh paying more than an ordinary Israeli buyer. Regulation 12A, applying to transactions from 15.8.2024 onward, fixes this: the Oleh keeps the regular exempt bracket and pays a reduced 0.5% above it.

Regulation 12A — the new benefit (transactions from 15.8.2024)

Regulation 12A applies only to a single home used as the Oleh's own residence — not an investment property and not business premises — up to a value ceiling of NIS 20,183,565. The rates:

• 0% up to NIS 1,978,745 (the regular single-home exempt bracket).
• 0.5% on the portion between NIS 1,978,745 and NIS 6,055,070.
• Above NIS 6,055,070 — the regular single-home brackets (8% and 10%).
• The benefit is granted once only.

Regulation 12 — when is the old track still worth it?

Regulation 12 charges 0.5% up to NIS 1,988,090 and 5% above, with no exempt bracket. For a single residence it is almost always the worse deal — on a NIS 4.1 million home it produces about NIS 115,536, more even than the regular track. But it has two advantages 12A does not:

• It covers a home that is not your only one — an Oleh buying an additional or investment apartment would otherwise pay 8% from the first shekel. Under Regulation 12, a NIS 3 million apartment costs about NIS 60,536 in tax instead of NIS 240,000.
• It covers business premises — a shop, office, or workshop bought for the Oleh's own business. The benefit is available once for a dwelling and once for a business property.

Comparison table: Regulation 12 vs Regulation 12A

Who gets to choose between the tracks?

An Oleh who made Aliyah before 15.8.2024 may choose whichever track is better for the specific purchase. An Oleh who arrived on or after 15.8.2024 is entitled only to Regulation 12A. In both tracks, the window runs from one year before Aliyah to seven years after arrival, and time spent in mandatory military service does not count toward the seven years. The benefit is claimed with Form 2973, filed together with the transaction report. Note for pre-Aliyah buyers: you can sign the purchase before you immigrate, as long as the Aliyah follows within a year.

The trap: renting the apartment out can void the benefit

One more thing to know: the Oleh benefit exists for purchase tax only. There is no dedicated Oleh benefit for capital gains tax (Mas Shevach) when selling — the ordinary rules and exemptions apply.

Reporting, payment, and the lawyer's role

The transaction must be reported to the Israel Tax Authority within 30 days of signing and the tax paid within 60 days. Choosing the wrong track — or missing Form 2973 — can cost tens of thousands of shekels. Comparing the tracks in real numbers, confirming eligibility, and filing correctly are part of proper legal representation in the deal. Adv. David Abebe, an Amharic-speaking real estate lawyer with experience guiding Olim through property purchases in Ma'ale Adumim and the surrounding area, handles the process in Hebrew, Amharic, or English.

This article provides general information only and does not constitute legal advice or a substitute for individual legal counsel. Laws, figures, and procedures may change.