As hatred and antisemitism rise globally, a new wave of immigration is approaching. However, Israel remains unprepared to receive these newcomers.
Antisemitism is currently reaching peaks not seen since the Holocaust, serving as a dire alarm rather than a mere statistic.
History is clear: Every wave of war and hatred is inevitably followed by a wave of aliyah. This trend has already begun, with immigration from France tripling in a single year, nearly doubling from the UK, and over 13,000 new aliyah files opened in North America in the last year alone.
These figures represent real families searching for homes to settle in, but the state’s current level of readiness is insufficient.
A major obstacle is that Israel effectively taxes those attempting to make aliyah.
Eroding benefits for immigrants
For years, distortions in the Israeli tax system have eroded the benefits intended for immigrants. Currently, a foreign resident who has not yet officially immigrated is charged an 8% purchase tax from the first shekel, the same rate applied to an Israeli investor buying a second home, even if it is the foreign resident’s only property in the world.
In contrast, a recognized new immigrant pays only 0.5% on the portion up to approximately NIS 2 million and 5% on the remainder.
On an apartment worth NIS 2.5 million, the difference is staggering: A new immigrant pays roughly NIS 35,500, while a foreign resident who has not yet completed their paperwork pays about NIS 200,000.
This creates a gap of NIS 164,000, nearly five-and-a-half times the cost for the exact same apartment. The damage from this policy extends beyond the individual immigrant, as the 8% tax also drives away investors. Fewer investors in the real estate market mean fewer apartments available for rent, leading to a lower supply and higher rental prices.
Ultimately, two groups pay the price: new immigrants seeking a roof over their heads at the start of their journey, and young Israeli couples struggling with a rental market that has lost all proportion.
A tax policy designed to cool the purchase market is failing exactly those whom the state is supposed to protect.
Recruiting immigrants but not assisting them
This situation reveals a national paradox: Israel spends billions on recruiting immigrants through international fairs and advertising, only to charge those same people a NIS 200,000 tax penalty simply because they did not finish their bureaucratic paperwork before purchasing a home.
It is as if the left and right hands of the state are working in opposite directions. For instance, a person might open an aliyah file in Paris and purchase a home in Israel to be prepared for their arrival, only for the state to penalize them for acting proactively.
Furthermore, many immigrants who purchased homes as foreign residents and later moved to Israel are entitled to tax refunds, but because the process is complex and the state does not proactively inform them, most remain unaware that the money is theirs.
Usually, only those with experienced legal counsel receive these funds, while others simply lose out. History has already told this story twice, such as in 1967 and during the 1990s, when surges in aliyah led to massive spikes in housing prices because the state failed to prepare.
The current wave is different, consisting of middle-to-upper-class families from cities like Paris, London, and New York who have capital and specific demands for housing in Tel Aviv and Jerusalem.
The impact on purchase and rental prices will likely be sharper and faster than expected, hurting both new immigrants and young Israelis. To turn this wave into an engine for growth rather than a disaster, the state must act now by creating a special tax track for declared immigrants, removing financing restrictions, and expanding benefit windows.
The wave is coming, and the only question is whether Israel will manage it or be managed by it.
The writer is a former MK who served as a member of the Foreign Affairs and Defense Committee and is an expert in global real estate investments.