Housing rights and benefits for Olim
Posted on 09. Jun, 2010 by Buy-It In Israel Staff in Aliyah
©iStockphoto.com/Igor Shootov
Finding a home in Israel is one of the main undertakings which new immigrants or Olim are faced with when moving to Israel. In order to facilitate the absorption of living in Israel and integration into the everyday life in the Holy Land, the Israeli government grants new immigrants a number of rights and benefits that are related to homes.
Benefits to which new immigrants are entitled range from rental assistance, arnona (municipal taxes) reduction to Israel mortgage assistance andacquisition tax reduction when buying a home in Israel. Assistance and eligibility can vary depending on age, marital status and additional criteria.
The following is a summary of the incentives that are currently available:
1. Rental assistance
New immigrants are automatically eligible for rental assistance from the second year after making Aliyah through the Ministry of Construction and Housing. Eligibility for automatic assistance (without an income investigation) to new immigrants is given for up to five or six years from their date of Aliyah. Rent subsidy will be automatically received every month and directly transferred into the new immigrant’s bank account.
The sum of the assistance varies according to family status and the number of years in Israel, but will not exceed 95 percent of the rental fees:
i) A single new immigrant will receive a rental allowance of NIS 223 a month during the second, third, and fourth year of making Aliyah. In the fifth year, assistance amounts to a monthly subsidy of NIS 89.
ii) Single-parent families are automatically eligible for assistance for a period of five years, beginning from the second year in Israel and up to six years from the date of making Aliyah. Rental monthly assistance amounts to NIS 402 in the second year of making Aliyah, in the third year to NIS 332, in the fourth and fifth year to NIS 223, and in the sixth year to NIS 134.
iii) An immigrant family will receive a monthly rent allowance of NIS 402 in the second year after making Aliyah, NIS 332 in the third year, NIS 223 in the fourth year and NIS 99 in the fifth year.
iv) Immigrant soldiers serving in the Israeli Defense Forces within their period of eligibility for rental assistance will be entitled to continued assistance based on the fourth year (fifth year in Israel) for the duration of their regular service at a rate of NIS 223. Lone immigrant soldiers who are in regular service in the IDF will receive additional rental assistance.
v) Immigrants, including the elderly and families living on National Insurance allowances are entitled to increased rental assistance.
2. Mortgage allowance
When purchasing a first home in Israel as a new immigrant, the period of eligibility for government assistance on Israel mortgage allowance is 10 years from the date of Aliyah. Immigrants who are still within their period of eligibility are entitled to receive a low interest rate compared with the current interest rates in the market for the amount of NIS 150,000 on a mortgage loan from the bank.
3. Mas Rechisha reduction
In addition, new immigrant home-buyers are entitled to a discount on purchase/acquisition taxes (Mas Rechisha) when acquiring a property within a period of seven years of making Aliyah. Purchase taxes in Israel on a residential dwelling for Israeli home-buyers are progressive and divided into three levels according to the value of the property: on the first level of the value of up to NIS 1,084,935, the tax rate is 0 percent; on the second level of the value of between NIS 1,084,935 and NIS 1,524,770, the tax rate is 3.5 percent; on the third level of the value of over 1,524,770, which is the highest bracket, the tax rate is 5 percent.
While new immigrant home-buyers get a discount which can be substantial depending on the value of the property, Olim will pay a purchase tax of 0.5 percent on a home price value of up to NIS 1,393,200 and 5 percent on a home price value of over NIS 1,393,200. (see Mas Rechisha/Purchase Tax calculator)
4. Arnona discount
During one of the first two years after making Aliyah, new immigrants are entitled to a discount of between 70 percent to 90 percent in Arnona municipal monthly tax payments limited to a period of 12 months. The rate can vary from one city to another. In order to benefit from the discount new immigrants will need to transfer the Arnona bill into their name at the city’s municipality.
The information in this article serves as guidelines to entitlements of rights and benefits which can be subject to change over time by the Israeli government. Up-to-the minute information can be obtained from any local branch of the Ministry of Immigrant Absorption (Misrad Haklita) for reconfirmation that conditions are still the same and rates have not changed.
The contents of this article are designed to provide the reader with general information and not to serve as legal or tax advice for a particular transaction. Readers are advised to consult with legal counsel prior to entering into any transaction.
© Copyright 2010.
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