Form 2973: Step-by-Step Purchase Tax Exemption Application

What Is Form 2973?

Form 2973, officially called Bakasha L'Ptur Chelki Mi'Mas Rechisha (Application for Partial Exemption from Purchase Tax), is the form you file with the Israel Tax Authority to claim the reduced מס רכישה (Mas Rechisha) brackets available to olim chadashim. Without filing this form, you will be assessed at the standard (much higher) purchase tax rates, even if you are eligible for the oleh discount.

Filing the form correctly is essential. Errors or missing documents result in the application being returned, delays in property registration, and potential penalty interest if the deadline is missed.

When to File

Form 2973 is submitted as part of the real estate transaction declaration. Specifically:

• Your property lawyer files the mas rechisha declaration (Form 7002) within 30 days of signing the purchase contract
• Form 2973 is filed alongside or shortly after Form 7002, requesting that the oleh discount be applied to the transaction
• Payment of the reduced mas rechisha amount is due within 60 days of signing the purchase contract

In practice, your property lawyer handles both forms simultaneously. Your job is to provide the supporting documents promptly so there are no delays.

Required Documents

You will need to provide the following to your lawyer for the Form 2973 filing:

• Teudat Oleh (Immigration Certificate): The original or a certified copy proving your oleh status and your official aliyah date. This is the most critical document — it establishes your eligibility and the start date of your 7-year window
• Teudat Zehut (Israeli ID): Your Israeli identity card confirming your personal details and ID number
• Sale contract (Chozeh Mecher): The signed purchase contract for the property, including the purchase price and payment schedule
• Lawyer's declaration: Your lawyer submits a declaration confirming that this is your first property purchase in Israel as an oleh, and that you are within the eligible timeframe
• Proof this is your first purchase: A declaration that you do not own any other residential property in Israel. If you co-own property with a spouse, the rules may differ — consult your lawyer

Where to Submit

Form 2973 is submitted to the regional tax office (Misrad Mas Rechisha) that has jurisdiction over the property's location. Israel has several regional offices:

Your lawyer knows which regional office handles your transaction and files accordingly. You typically do not need to visit the office in person — your lawyer submits on your behalf.

Timeline: What to Expect

After your lawyer submits Form 2973, the Israel Tax Authority reviews the application:

• Standard processing: 30-60 days from submission. During this period, the Tax Authority verifies your oleh status, confirms this is your first purchase, and checks that you are within the 7-year eligibility window
• Approval: You receive a mas rechisha assessment notice (Shomah) showing the reduced tax amount. If you've already paid a preliminary amount, any overpayment is refunded or credited
• Clearance certificate: Upon payment, the Tax Authority issues an Ishur Mas Rechisha (clearance certificate) which is required to register the property at the טאבו (Tabu) (Land Registry)

What Happens If Rejected

Rejections are relatively rare when documentation is complete, but they can happen for several reasons:

• Outside the 7-year window: If more than 7 years have passed since your aliyah date, the discount no longer applies
• Not your first purchase: If you have previously purchased residential property in Israel, you are not eligible for the oleh rate
• Missing or incomplete documents: The most common issue. The Tax Authority will request additional documents, adding 2-4 weeks to the process
• Status dispute: In rare cases, the Tax Authority may question your oleh status. Your lawyer can submit additional documentation to resolve this

The 7-Year Eligibility Window

Retroactive Application: Buying Before Aliyah

One important provision: you can apply for the oleh mas rechisha discount retroactively if you purchased property in Israel up to one year before your official aliyah date. If you bought an apartment while still living abroad and made aliyah within 12 months of that purchase, you can file an amended mas rechisha declaration to claim the reduced rates.

This retroactive option requires filing within a specific timeframe after aliyah. Inform your property lawyer of your aliyah plans at the time of purchase so they can structure the filing accordingly.