A recent court ruling has redefined how new immigrants can potentially qualify for reduced purchase tax in Israel, stating that the relevant “purchase date” is the completion date of the apartment—not the date the contract is signed. This game-changing interpretation may offer those buying new construction before aliyah greater flexibility and more time to make the move. For eligible buyers, the ruling could lead to substantial tax savings. While the decision is currently in effect and may influence future rulings, it does not change the law and is not binding on the Israel Tax Authority outside this specific case. It may still be appealed.

Under Israeli law, olim are entitled to the Aliyah Benefit, a reduced purchase tax rate, when buying their sole residence in Israel, provided the purchase takes place within a window that begins one year before making aliyah and extends up to seven years afterward.

In addition, the law allows new immigrants and veteran returning residents (those who lived abroad for at least 10 consecutive years) to qualify for the Single Residence Benefit—a reduced tax rate available to Israeli residents when purchasing their sole home—if they become residents under Israeli tax law within two years of the purchase date. In other words, if someone doesn’t make aliyah within 12 months of the apartment’s delivery, they may still be eligible for the Single Residence Benefit, as long as they establish Israeli residency within two years of signing the contract.

Redefining the Purchase Timeline for Olim

Mrs. Bonnie Eisler, a 73-year-old widow and U.S. citizen, purchased an off-plan apartment in Beit Shemesh on September 3, 2017, in preparation for her planned aliyah. She officially became an Israeli resident on December 1, 2020, during the height of the COVID-19 pandemic. Due to pandemic-related delays, the apartment was only completed and delivered on January 26, 2022. Eisler argued that the two-year period for the Single Residence Benefit should be counted from the actual delivery date of the apartment, not the date of contract—especially when the purchase was made from a developer.

The Director of the Jerusalem Real Estate Tax Office rejected her request, claiming that the benefit only applies if she became a resident within two years of signing the contract. Since she signed in 2017 and only made aliyah in 2020, the Director argued that she missed the deadline and was not eligible.

Eisler countered that the law allows a new immigrant to purchase a home before aliyah, as long as the apartment will be ready for occupancy. Therefore, she argued, the two-year clock should start from the date the apartment is delivered, not the date of the contract. The court agreed, ruling decisively in her favor.

Delivery Date = Purchase Date

The court noted that this view is consistent with the Israel Tax Authority’s approach, which begins counting timelines only once the apartment is ready for occupancy.

It referred to a previous case—known as the Melchior Ruling—in which the Supreme Court allowed a delay in selling a home after purchasing a replacement property. This was to avoid leaving the buyers without a place to live. The court pointed out that just as it’s unreasonable to expect someone to sell their current home before their new one is livable, it’s equally unreasonable to expect people to make aliyah if the home that they bought is not ready for occupancy.

In light of the Melchior Ruling, the court determined that the relevant purchase date should be considered the date the apartment’s construction was completed and delivered, rather than the date it was purchased “on paper.” Therefore, in Eisler’s case, the two-year period for receiving the benefit under Section 9 of the Law began on January 26, 2022 (the date the apartment was delivered)—and thus she was eligible for the benefit.

What This Means for Olim

The court emphasized that the purpose of the law is to assist new immigrants in finding housing and settling in Israel, not to penalize them for construction delays beyond their control. Requiring someone to buy a home before it is even livable undermines that goal.

This ruling is a major win for olim, potentially offering greater flexibility and fairness for those navigating the complexities of aliyah and homebuying simultaneously. It shows that when delays are outside the buyer’s control—such as during a pandemic or due to contractor setbacks—it may be possible, in certain circumstances, to extend the deadlines for obtaining a tax exemption or reduction.

This is especially significant for new immigrants and foreign residents who have purchased, or plan to purchase, off-plan apartments while still living abroad. The ruling confirms that these buyers may have up to 12 months from the apartment’s delivery date, rather than the contract date, to make aliyah and qualify for the Aliyah Benefit. Alternatively, they may qualify for the Single Residence Benefit if they become Israeli tax residents within 24 months of the delivery date. Either way, the potential savings can be significant—tens, or even hundreds, of thousands of shekels.

Additionally, this precedent may provide new immigrants who were previously denied tax relief due to construction delays with grounds to appeal or request a refund.

Legal Status: Helpful, but Not Binding

While this ruling is a positive development for olim, it’s essential to note that it does not alter the law and is not binding nationwide. The Jerusalem District Court issued the decision and applies directly only to the specific case of Bonnie Eisler.

The Israel Tax Authority is not obligated to follow district court rulings in other cases and may continue to interpret the law differently, especially in other jurisdictions. In practice, the Authority often chooses not to adopt district court decisions that contradict its position, unless it is compelled to do so by a Supreme Court ruling.

Additionally, while the court was sympathetic to construction delays and the impact of the pandemic, it’s important to note that there are strict rules about which deadlines can be extended under tax law. Not all delays—such as those caused by developers or external circumstances—qualify for deadline extensions, especially when the timelines are considered legal conditions rather than flexible deadlines.

For now, this ruling sets a strong precedent for buyers in similar situations; however, anyone relying on it should seek legal guidance tailored to their specific case and not assume automatic eligibility for extensions or refunds.