TAMA 38 Has Lapsed: What a Pinui-Binui Agreement Binds You To

The Government Authority for Urban Renewal describes building-level renewal as continuing to step up "after the expiry of TAMA 38", and the press release for its 2025 annual report, dated 15 June 2026, counts 21 cities in which replacement plans were approved or advanced ¹. If the English explainer you are reading is built around TAMA 38, it is describing a scheme that no longer runs.

What replaced it is municipal, in Hebrew, and, in the Authority's own words, adapted to the particular needs of each locality ². And in the same body of law sits one remedy whose trigger is a fact about you rather than about your building: that you signed in a language you do not know.

> Cross-border note. This page keeps three things apart on purpose: what Israeli law does, what your home country still does, and what the tax treaty changes. Blending them is how an oleh gets a property transaction wrong. Nothing here is personal legal or tax advice, and none of it replaces the lawyer who represents the residents in your building.

> The remedy that exists only for you. An apartment owner who signed a pinui-binui (פינוי ובינוי) transaction in a language they do not know, without the developer or anyone acting on its behalf explaining the main points of the transaction in a language they do know, may apply to the Commissioner for Resident Enquiries at the Government Authority for Urban Renewal for a decision that, in the circumstances, the transaction is void ⁸. The Commissioner publishes a decision within 90 days of submission and may extend by up to 90 more with a stated reason ⁸. A decision that your application is justified because of a breach of a provision of law serves as prima facie evidence of what it determines in any legal proceeding ⁸. The intake list records whether the applicant's rights in the apartment are as owner or tenant ⁸. The full section is below.

What replaced TAMA 38, and where do I find the plan that governs my building?

A city-level תכנית בניינית (tochnit binyanit, building-level renewal plan), and it is a municipal answer rather than a national one. The Authority's page on these plans, updated 16 April 2026, describes what they do: the plan divides the city into zones by category, such as main streets, secondary streets and central urban hubs, and fixes for each building in each zone which planning mechanism applies to it, either strengthening and thickening or demolition and rebuild. It sets building volume and permitted uses per plot so that a permit can be issued "similarly to TAMA 38" ².

Not every city has one. The Authority's own list, as of that 16 April 2026 update, runs to 22 municipalities at statuses ranging from "start of planning" to "approved and in force" ², and the Authority's Q&A says plainly that where your city has no such plan you go to the municipal engineering department instead ⁵.

Two consequences matter more to a newcomer than to anyone else. First, where a plan exists it also designates areas earmarked for pinui-binui and substantial intensification, for example around future metro stations, where renewal of each building separately is not permitted at all, and it sometimes designates areas where no renewal is permitted ². So "this building is a TAMA candidate" can be flatly untrue for reasons that live in a municipal document. Second, that document exists in Hebrew, on your city's planning portal. There is no national English summary of it, and Kol Zchut, the plain-language Israeli rights portal, switched its English edition off in 2023 (see below).

None of the Authority pages used here names a single national expiry date for TAMA 38, and this page will not supply one. What they establish is that the plan has lapsed and that replacement plans are city work ¹². The answer for your address comes from your local planning and building committee and the city engineering department ⁵, not from an English blog.

Which renewal track is my building actually on?

There are three live civilian tracks plus a new war-damage track, and they differ in who decides they apply, what unlocks the tax relief, and whether a holdout can be compelled.

The war-damage track is new, and the Authority's news items are where it is documented. They record four first rehabilitation-and-renewal areas declared by government, in Dimona, Arad, Rehovot and Tel Aviv, announced on 6 August 2026 and covering the demolition of 310 existing apartments in 34 buildings and the construction of about 1,000 new ones; and two further areas, in Ramat Gan and Bnei Brak, announced on 27 July 2026 following a government approval of 5 July 2026 ³. The Authority has also published a model agreement for the sale of apartments to developers in those compounds ³. A flat priced attractively in a town that took missile damage may sit inside one of those declared areas, so the declared-areas list belongs on the same checklist as the compound register below.

The declaration is the hinge for pinui-binui, and it is worth stating flatly. The Authority's own compound register says a declaration is what gives residents and developers the ability to advance the plan in certain planning institutions, what confers the various tax benefits, and what makes a refusing-owner claim possible ⁴. No declaration, no tax relief and no power to compel anyone.

What do I check before I buy into a building that is "about to be renewed"?

Three registers. They are the only account of a project that does not depend on hearing about it, in Hebrew, from a neighbour or the vaad bayit (ועד בית).

The compound register. The Authority's list distinguishes five states, and the difference between them is the difference between a rumour and a project: declared; being promoted by a public body although not yet declared and with no statutory process started; being promoted by developers whose plans met the planning institution's threshold conditions but not yet declared; sitting inside a government-declared preferred housing area; and in execution, meaning a building permit was issued or construction started, with the list showing how many permits were issued out of the total proposed units, because a compound can be split into sub-compounds or permitted in stages ⁴.

The city plan. Ask which zone the building sits in under the municipal tochnit binyanit and which mechanism that plan assigns to it, including the possibility that it assigns none, or that your city has no such plan at all ²⁵.

The tabu (טאבו) extract. In a renewal context you are looking for something specific: a caveat registered in a developer's favour. The Commissioner's intake list treats a land registry extract including the registered note, where a caveat has been registered on the apartment, as one of the documents needed to prove what is claimed about an apartment ⁸. What that caveat, the seller's signed agreement and its power of attorney bind you to as the incoming purchaser is the question to put to your own lawyer before you sign, and this page will not assert an outcome for you. Our tabu and lawyer due-diligence guide covers the extract itself, and the buying process covers the transaction mechanics this sits on top of.

What does the agreement bind me to, and what must the developer give me?

The Authority publishes a residents' guide to the principles of engaging with a developer in pinui-binui projects, first published in 2018 and updated 29 April 2026, and it is the closest thing to a checklist that exists ⁷. Six parts of it matter disproportionately to someone new to the country.

Independent counsel, and who is expected to pay for it. The guide recommends choosing one lawyer, experienced in real estate and in pinui-binui transactions, to represent all the residents, and states that the lawyer will not also represent the developer ⁷. On cost, the Authority's Q&A says it is accepted in the urban renewal market today that developers pay the full costs of the project, from construction costs through the interim rent to the professionals who provide services to the residents, such as the lawyer representing the residents and the construction supervisor (מפקח על הבנייה) ⁵. The residents' guide is more cautious on the same point, listing "the possibility of a contribution to the fee of the lawyer representing the residents" among the consideration components rather than a guaranteed one ⁷. Read together: do not assume the lawyer is your cost, and settle who pays in the agreement.

The disclosure duty, and the escape hatch it creates. Anyone who receives payment from the developer, acts on its behalf, or whose fee depends on the transaction happening must declare this in advance, at the first approach to residents, before signing the agreement, and in the agreement itself, under §6 of the Pinui-Binui (Compensation) Law of 2006 ⁷¹¹. Breach of that disclosure and transparency requirement allows a resident to withdraw from a consent they gave to a pinui-binui transaction, even if they signed a binding engagement agreement ⁷. That is the strongest clause on this page for anyone who was approached by a person whose role they could not identify.

The assembly you must be invited to. Where the first transaction in a project was signed after 14 February 2022, the developer must, before having any resident sign a first transaction, convene an assembly of the apartment owners in the condominium and hand them a document setting out the main points of its offer ⁵. The duty counts as satisfied only if notice of the assembly was published ten days in advance, attendance reached 40% of the owners (failing which a completing assembly is held and attendance across both must reach at least 30%), the developer set out at the assembly the type of transaction, its experience, which buildings are expected to be included and who acts on its behalf, "the developer included an interpreter at the assembly as required", and the minutes were delivered ⁵. Where the duty is not met, a majority of owners may cancel the engagement with the developer, provided the developer has not by then engaged with 40% of the owners ⁵. The interpreter condition is on the statutory checklist, so an assembly run only in Hebrew where an interpreter was needed is an assembly whose duty was not met, and the cancellation remedy turns on that checklist.

The offer document. At least two weeks before the first transaction is signed in the condominium, every apartment owner must receive a document with the main points of the developer's offer, including information on the transaction and on the developer, the developer's undertakings in the transaction, expected future costs and the offer's expiry date, with the same cancellation remedy for breach ⁵. Note where the interpreter condition does and does not appear: on the Q&A's own checklists it sits among the conditions for the assembly, not among the requirements for this written document ⁵. Budget for having it translated rather than expecting a translation.

A separate regime for organisation agreements. An הסכם ארגון is not itself a renewal transaction. It is an agreement to organise apartment owners in a condominium in order to advance one, it is not a pinui-binui or TAMA 38 transaction, it includes the owner's undertaking of exclusivity to the organiser for a limited period, and it has bounded timetables, all under the Urban Renewal (Transaction Organisation Agreements) Law of 2017 ⁵¹¹. Owners may not be asked to sign one before a residents' assembly, and that assembly has its own attendance rules: 40% of the apartment owners in the condominium, with public apartments excluded from the count, and in a condominium with at least 17 apartments, 40% cumulative across two assemblies provided at least 30% attended the first and at least 20% the second ⁵. Do not merge those numbers with the pinui-binui assembly numbers above. They are different rules with different triggers. The distinction matters for the language remedy too: the voidness route described below is written for a pinui-binui transaction ⁸, and the Q&A's own definition says an organisation agreement is not one ⁵, so the route the sources do describe for an organiser is the Commissioner's separate head on organiser conduct, or a finding that the organisation agreement has lapsed ⁸.

What you should not sign first. The guide advises against signing, before a pinui-binui agreement, any document granting rights or restricting the residents' ability to negotiate. A time-limited letter of intent is acceptable, and the guide's recommended cap is a term not exceeding about 18 months from the date most residents sign, conferring no rights and imposing no restrictions beyond the agreed exclusivity, and expressly subject to agreement on the developer's identity, examination of the consideration and the remaining terms including the securities ⁷.

Here is the division of money the sources set out.

On the replacement apartment itself, the guide is specific: the agreement fixes its area against the existing one, the mechanism for choosing where the replacement apartments sit in the new building, whether by lottery, chronological order of signature, an appraiser acting for the residents or another method acceptable to the parties, and the technical specification of the replacement apartments offered to the original residents must be similar to that given to the buyers of the developer's own apartments ⁷. That last requirement is easy to enforce and easy to miss if you cannot read the Hebrew specification document, so it belongs on the list you hand your lawyer.

Securities are the clause that decides what you are holding if the developer fails after you have moved out. The accepted structure the guide describes is that close to evacuating their apartments, and as a condition of it, the developer delivers to the residents a guarantee in the form set by the Sale Law (Assurance of Investments of Apartment Purchasers) of 1974 at the value of the new apartment, and likewise on any transfer of other rights in the developer's favour such as registration of a charge for the financing bank or caveats for the developer's own buyers; plus, as a condition of evacuation, an autonomous bank guarantee securing payment of the rent until the new apartment is delivered, which may be set to decline as construction progresses ⁷¹¹. If you already read our new-build versus second-hand guide, this is the same statutory guarantee form you met there, doing a different job at a different value. Where the apartment carries a mortgage or attachment, the guide says the agreement needs to oblige the developer to reach an arrangement with the mortgage banks that allows removal of the residents' mortgage and charging of the apartment for the project, for example by assigning the Sale Law guarantee to the mortgage bank or by the developer posting alternative securities ⁷.

What happens to my home, my mortgage and my costs while the building is gone?

You move out, and the guide recommends the developer fund your rent from the date the existing apartment is handed over until you enter the new one ⁷. Rent is set by reference to apartments with characteristics identical to the residents' existing ones, close to the evacuation date, at market prices, at least at the level customary in that area at the date of evacuation or in a similar nearby area, and the agreement is to set the manner and frequency of payment and a mechanism for indexing the rent to market changes over the relevant period ⁷. Note what the benchmark is: the customary level in that Israeli area at that date, which you can only test against Israeli listings, never against what you paid before you moved country. No source used here gives a shekel figure, and a developer who quotes one as fixed for the duration is quoting a number the guide says should be indexed. The clause does not apply where residents move directly from the old apartment into the replacement, for example where the developer builds the replacement apartments on vacant land inside the compound ⁷.

Three things a newcomer should watch during this phase. Your mortgage charge has to be dealt with by arrangement rather than ignored ⁷. The guide says to require the developer's liability for the new apartments to follow the Sale (Apartments) Law of 1973 and its bedek and warranty periods, and to require confirmation from an insurance company that the developer holds contractors', works, third-party, employers' liability and professional indemnity cover ⁷¹¹. And the guide states plainly that on moving into the new apartments, residents face ongoing payments that may be higher than before, including vaad bayit or management-company charges and arnona ⁷.

On that last point there is a partial cushion, and it is worth describing accurately rather than optimistically. The Authority's Q&A says that in order to ease those added costs for residents returning to their apartments in a pinui-binui project, a discount in arnona will be given in respect of the area added to the new replacement apartment compared with the original apartment, for a limited period and on a graduated basis ⁵; the residents' guide frames the same thing as a possibility that the city council will decide to grant a discount for the differences in apartment areas for a fixed period ⁷. Treat it as conditional, ask your municipality, and note that it is a different thing entirely from the separate discount available to new immigrants, which is covered in the oleh arnona discount guide.

What happens if I refuse, or my neighbour does?

A refusing owner, a dayar sarvan (דייר סרבן), is an apartment owner in a condominium who refuses to sign a pinui-binui agreement, or conditions consent on unreasonable terms, after a special majority of the apartment owners in the mikbatz has agreed to the transaction ⁵. A מקבץ (mikbatz) is a building, or several buildings, that must be evacuated in order to erect a new building within a pinui-binui compound ⁵. Every threshold below is measured on the mikbatz, not on "the building", which is the unit the English word would suggest.

The special majority is 66% of the apartment owners in the mikbatz and at least 60% of the apartment owners in each building ⁵.

Worked example. Take a mikbatz of three buildings holding 12, 10 and 8 apartments, 30 in total. The mikbatz threshold is 66% of 30, which is 19.8, so 20 owners, since 19 of 30 is only 63.3%. The per-building floors are 60% of 12 = 7.2, so 8 owners; 60% of 10 = 6 owners; 60% of 8 = 4.8, so 5 owners. Two things fall straight out of that arithmetic. Meeting every building floor exactly gives 8 + 6 + 5 = 19 signatures, one short of the 20 the mikbatz needs, so the floors alone never carry the project. And 20 signatures made up as 12 + 8 + 0 clears the mikbatz threshold and still fails, because the third building delivers none of its 5. Now put yourself in the 12-apartment building as the only holdout in the mikbatz: your building supplies 11 of 12, past its floor of 8, and the mikbatz has 29 of 30, so the special majority is reached without you.

In that shape, refusing does not stall the project on its own. It exposes you to the refusing-owner regime. Run the same arithmetic on your own mikbatz before assuming it holds, because the one case where a single refusal does hold a building below its floor is a building of two apartments, where one signature is 50% and the 60% floor cannot be met without both owners.

That regime has teeth. A refusing owner is liable in tort to the other apartment owners in the mikbatz who agreed to the transaction, for the damage caused to them by non-performance of the transaction; alternatively a court that has examined the case and determined that the refusal is unreasonable may appoint a lawyer or an accountant to sign the transaction in their place ⁵. Where the objection stems from unlawful building or unlawful use of the common property or of the area adjoining the building, the court may rule that the building offender's rights, in whole or in part, are not counted in computing the special majority ⁵. If you bought a second-hand flat with an enclosed balcony or a roof addition and never checked its permit status, that clause is one to read closely, and our page on unpermitted additions and buyer risk explains what to look for.

Refusal is held reasonable on defined grounds, and the list is short enough to memorise: where the transaction is not economically worthwhile; where the refusing owner was not offered alternative accommodation for the construction period, or was not offered accommodation including adaptations where they or a family member living with them is a person with a disability; where they were not offered adequate securities; where special personal circumstances of theirs make performance on the terms agreed with the other owners unreasonable; where the statutory conditions on adaptations to the permanent replacement apartment were not met for a person with a disability; and in the case of an elderly owner to whom the dedicated consideration alternatives set out in the Q&A's elderly-residents answer apply, that answer defining an elderly resident as an owner who has lived in the apartment for at least two years and had reached 70 by the date the first owner in the condominium signed with the developer ⁵. Read that list once more for what is missing from it: none of the six grounds is a language ground. The language route the sources do describe is a separate one, to the Commissioner, set out below ⁵⁸.

"Not economically worthwhile" is testable, and you do not have to fund the test. Residents deliberating over a transaction a developer has offered them may apply to the Authority for the appointment of a pinui-binui appraiser, whose main role is to examine the transaction and determine whether it is economically worthwhile for the apartment owners and, if not, what would be required to make it so. That opinion serves as prima facie evidence in a court hearing if a refusing-owner claim is filed, and the appraiser's fee is paid by the developer at a rate fixed in regulations ⁵. The Authority's service page for that application, last updated 22 February 2024, says the service is provided free of charge, lists the documents to attach, including a tabu extract, the signed or draft contracts, the terms for determining the consideration and the applicable and proposed detailed plans, and states that submitting the application requires the consent of 40% of the apartment owners in the relevant mikbatz ⁶. The Authority's Q&A, on the same subject, describes a much higher special majority: at least 67% of the apartment owners in the mikbatz, to whose apartments at least 67% of the common property is attached, plus, in each building in the mikbatz, more than 50% of the apartments agreeing, and more than 50% of the common property attached to the majority of those agreeing apartments ⁵. Both pages are current government publications and they do not line up. Take the service page as the stated application threshold, note the Q&A figure, and have the residents' lawyer confirm which applies to your compound before relying on either. The underlying valuation runs on Appraisal Standard 21, which prices the costs of executing the project, the costs of dealing with residents including guarantees, rent for the construction period, funding the residents' professionals and establishing a building maintenance fund, and the developer's expected income, against minimum profit rates set by the Government Appraiser that vary by geographic region ⁵.

One structural point about who speaks for you. The residents' representation (נציגות) is to be chosen by the apartment owners and need not be identical to the vaad bayit; it is not a legal entity and is not authorised to sign on behalf of the property owners or to take material decisions in the project, and the Authority recommends that agreements limit its role to day-to-day decisions with no material effect on the character or conduct of the project ⁵¹⁵. If someone tells you the representation already signed for the building, that is a claim to check, not a fact to accept.

I signed something in Hebrew that I did not understand. What now?

You may be able to have the transaction declared void, and this is the part of Israeli urban renewal law that was written with you in mind. The Commissioner for Resident Enquiries at the Government Authority for Urban Renewal handles four heads of complaint: the conduct of urban renewal administrations, developers and other residents, including allegations of unreasonable pressure on a resident to give consent to joining a project; conduct by organisers contrary to the 2017 organisation-agreements law, such as breaching the duty of fairness and care owed to apartment owners, failing to act for them in trust, fairly and in an accepted manner, or failing to deliver information in their possession on a material matter concerning the transaction; whether an organisation agreement has lapsed for non-compliance with that law; and voidness of a pinui-binui transaction where an owner signed in a language they do not know and neither the developer nor anyone on its behalf explained the main points of the transaction in a language they do know ⁸. The Authority's Q&A names the statutory hook for that last head as §5ב of the Pinui-Binui (Encouragement of Pinui-Binui Projects) Law of 2006, and frames the section more broadly still, as voidness where the transaction was signed through abusive signing (החתמה פוגענית) ⁵. That is the same 2006 statute that carries the §6 disclosure duty above under its other registered name, the Pinui-Binui (Compensation) Law ¹¹.

The mechanics are worth knowing before you need them. The Commissioner publishes a decision within 90 days of submission and may extend by up to a further 90 days with a stated reason ⁸. A decision that a resident's application is justified because of a breach of a provision of law serves as prima facie evidence of what it determines in any legal proceeding, so you would not have to prove those claims again in court, although the page is honest that a court presented with contrary evidence or contradicting arguments may still rule against the Commissioner's determination ⁸. Applications go through an online form, decisions are published on the Authority's site, and your application is passed to the person or body it concerns for their response ⁸.

Assemble the file the Commissioner asks for: what you are asking the Commissioner to do; your rights in the apartment, as owner or tenant; details of any additional owners or tenants; details of the organiser, developer, urban renewal administration, the lawyer representing the residents, or the person who obtained your signature; the date you signed; the date the first owner signed an organisation agreement; who was present when you signed; and the documents needed to prove the claims, including the organisation agreement, the transaction agreement, the power of attorney, the instrument of consent and a land registry extract including any registered caveat ⁸.

### If you are renting rather than owning

The honest answer is that the Authority material used here addresses owners. Its own glossary makes the boundary explicit: "property owners" are all rights-holders registered in the tabu; "residents" (דיירים) means the property owners plus public-housing tenants living in the building or compound; and free-market renters (שוכרים) sit in a third, wider category of "inhabitants" alongside people in buildings outside the compound ¹⁵. So the guidance addressed to דיירים is not addressed to you. Public-housing tenants do have a defined regime, including returning to a new apartment in the renewed compound, further alternatives from the Ministry of Construction and Housing, and not being charged rent or management and maintenance costs above what they paid before the project, subject to Ministry procedures ⁵. For a free-market tenant, no source opened for this page establishes a notice period, compensation or relocation right. That absence is not proof that none exists. What is established is that the Commissioner's intake list records the applicant's rights in the apartment as owner or tenant ⁸. Your practical position is set by your lease, so have the Hebrew lease read before a renewal project reaches your building, which is also the argument made in renting versus buying as an oleh.

### If the owner is a minor, under guardianship, or acting through an enduring power of attorney

Note what does and does not trigger this route: living abroad does not. What triggers it is the identity or capacity of the person whose property it is. Under a reform of the Administrator General's services effective 8 August 2025, the Administrator General at the Ministry of Justice is empowered under the Legal Capacity and Guardianship Law of 1962 to give administrative approval, instead of the court approval previously required, for a parent's dealings with a minor child's property, dealings by an attorney under an enduring power of attorney that has come into effect, and a guardian's dealings with the person's property ¹⁰¹¹. An application to approve an urban renewal transaction on such a property is now made on an online form through the national identification system, with no application to court ¹⁰. Three documents attach: the signed contract, a current tabu extract, and a confirmation from the residents' counsel evidencing the consent percentages and the uniformity of the consideration, in the prescribed form ¹⁰. Total handling takes up to 60 days from receipt of all documents, approval arrives as a digitally signed official confirmation by email, and where the Administrator General decides the application cannot be approved you are required to say within 21 days whether you want it referred to court with the Administrator General's position attached ¹⁰.

### And the English safety net you are assuming exists

Kol Zchut, the plain-language Israeli rights portal, translated around 700 pages into English in 2012 and 2013 in a collaboration with a non-profit, and removed the English information from the site on 2 February 2023, stating that it did not have the resources to maintain the required level of currency and reliability ⁹. Its English URL for the evacuate-and-rebuild topic now redirects to that notice. So on this subject the obvious English fallback is switched off, which is the gap this page exists to cover.

Israeli tax: which taxes does the renewal exemption actually remove?

Israeli relief comes from two named chapters of the Land Taxation Law, and it is conditional rather than automatic. The Tax Authority's 2026 seller and purchaser guide sets out chapter 5-4, "pinui ubinui", which carries the conditions for exemption from mas shevach (מס שבח) on the sale of an entitlement in a residential unit in a pinui-binui compound to a developer, subject to the definitions and presumptions in it; and chapter 5-5, exemption on the sale of a right in land whose consideration is affected by building rights under strengthening plans, which the guide describes as the conditions for exemption from mas shevach on the sale of building rights to a developer where the consideration is the strengthening of the building against earthquake ¹². The same guide still names TAMA 38 elsewhere, listing §49לב2(א) as the seller's notice in TAMA 38 transactions, strengthening and demolition ¹². What it does not do on the pages used here is assign a demolition-and-rebuild deal to one chapter by name, so which chapter your specific transaction runs under is a question for the residents' lawyer against the Land Taxation Law rather than an answer to take from any article.

Four limits belong in the same breath.

It depends on the declaration. For pinui-binui, the exemption route runs on a compound declared by the Director of the Authority or, before the 2021 amendment, by the Minister of Construction and Housing ⁴⁵.

It is capped, and the cap differs by track. The Authority's Q&A is clear that for TAMA 38/1 strengthening and thickening there is no limit on the number of units in the building owned by the same person, and that for TAMA 38/2 demolition and rebuild the exemption is given for one apartment per resident in each building ⁵. For a declared pinui-binui compound the published government guidance is not aligned: the Q&A states there is no limit on the number of units in the compound owned by the same person, while the residents' guide, updated 29 April 2026, states that the exemption from mas shevach and mas rechisha applies in respect of only one apartment in the compound even where that resident owns more than one there, all as set out in the Land Taxation Law ⁵⁷. If you own more than one unit in a compound, that is a question to settle against the Land Taxation Law with your lawyer before signing, not after.

It is destroyed by creativity. The consideration alternatives the guide describes, including a new apartment larger than the existing one, a smaller new apartment plus the balance in cash, two small new apartments whose combined value does not exceed one new apartment in the compound, an apartment outside the compound at the value of a new one inside it, or a sheltered-housing solution for older residents, are constrained by the Land Taxation Law so that the relief survives; departing from those described considerations is possible but will involve payment of tax ⁷.

It is not permanent immunity. The relief attaches to the step of handing your apartment to the developer. A later sale of the new apartment to a third party runs on the ordinary rules, which are covered in our mas shevach guide.

On the purchase side, the gate is Israeli residency rather than citizenship or aliyah eligibility. The Tax Authority guide draws the line explicitly: regular purchase-tax computation applies to someone who owns a residential apartment in addition to the one being purchased, and single-apartment computation applies to an individual who is an Israeli resident and owns only the apartment being purchased ¹². For counting the apartments the purchaser owns, the purchaser, their spouse, common-law partners and children up to age 18 (excluding a married child, or a child orphaned of one or both parents) are treated as one purchaser; an apartment let under protected tenancy before 1 January 1997 is not counted in the purchaser's tally, nor is one in which the purchaser's share does not exceed one third, nor an inherited apartment in which their share does not exceed one half ¹². Protected tenancy is a category most newcomers meet only through our key money guide. The guide does not address property you own abroad, so do not assume either answer on that; put it to your lawyer or the Tax Authority.

The oleh relief itself is narrower than the folklore. The 2026 guide describes it as available to an oleh, as defined in the regulations, purchasing a right in land in the year preceding entry to Israel and up to seven years after entry, once in respect of a single or replacement apartment under regulation 12א and once in respect of a business in which they or a relative work under regulation 12, claimed on Form 2973 attached to the declaration of the purchase, with the regulation 12 purchase-tax band updated once a year by the rate of increase in the index ¹². The window is anchored to your entry to Israel. The bands change every year, so read them live rather than from any article, including this one: see mas rechisha (מס רכישה) for olim, the Form 2973 walkthrough, and, if you bought before you landed, what your aliyah date does and does not do retroactively.

Home-country tax: does an Israeli exemption help your return back home?

For US citizens and green-card holders, no. The IRS states that the rules for filing income, estate and gift tax returns and paying estimated tax are generally the same whether you are in the United States or abroad, that you are subject to tax on worldwide income from all sources, and that US taxpayers who own foreign financial accounts must report them to the Treasury on FBAR (FinCEN 114), filed electronically by 15 April, even where those accounts generate no taxable income ¹³. An Israeli statutory exemption is an Israeli exemption. It removes an Israeli charge, and it does not, of itself, remove anything from a US return.

Whether handing an old apartment to a developer and receiving a new one is a realisation event on a US return, what basis carries into the replacement apartment, and how the shekel element is measured are questions this page will not answer, because no source used here settles them. That is the conversation to have with a US cross-border tax professional before you sign, not after the building comes down.

If you came from the United Kingdom, Canada, South Africa, France or Australia, this page establishes nothing about your position at home, and it deliberately does not guess. Your home-country exposure turns on that country's own residence and departure rules, and each of those regimes, including the departure and exit charges that bite on ceasing residence, is covered in its own country guide on this site rather than here. What you can take from this section is narrower and firmer: the United States is the jurisdiction whose claim follows the person rather than the residence, so the warnings above are addressed to US persons and should not be carried across to a non-US passport by analogy.

The treaty: does the US-Israel convention stop the double charge?

It reduces it to a credit, and for a US citizen it does not do much more. The convention's own table of articles is the map: Article 1 covers Taxes Covered, Article 6 the General Rules of Taxation, Article 7 Income from Real Property, Article 15 Capital Gains and Article 26 Relief from Double Taxation, and that table labels paragraph 3 of Article 6 "The Saving Clause" ¹⁴.

Israeli land appreciation tax is a covered tax: Article 1(1)(b)(iii) lists "the tax on gains from the sale of land under the land appreciation tax law" ¹⁴. Article 7(1) lets the state where the real property sits tax income from that property and gains derived from its sale, exchange or other disposition, and Article 15(1)(a) with 15(2) routes gains on Article 7 property back to Article 7 ¹⁴. So far, so favourable to Israel.

Then Article 6(3) undoes it for citizens: notwithstanding any provisions of the convention except paragraph 4, a contracting state may tax its residents and its citizens as if the convention had not come into effect ¹⁴. Article 6(4) preserves, for citizens, only the benefits under Articles 10, 21, 26, 27 and 28, which includes Article 26 on relief from double taxation ¹⁴. That leaves Article 26(1), under which the United States allows a citizen or resident a credit against US tax for the appropriate amount of taxes paid or accrued to Israel, subject to the provisions and limitations of US law ¹⁴. And Article 6(2) confirms that the Israeli exemption comes from Israeli law rather than from the treaty, since the convention is not to be construed to restrict any exemption accorded by the laws of a contracting state ¹⁴.

State the mechanical consequence carefully and no more strongly than this: Article 26 relief is a credit for Israeli tax paid or accrued. On a step where Israel imposes no tax because a chapter 5-4 or chapter 5-5 exemption applies, there is no Israeli tax to credit against whatever the United States decides to tax on that step. The Israeli exemption and the US credit are not two halves of one shield.

Does any of this involve PFIC?

No. This page is about real property and names no pooled investment vehicle of any kind. US tax treatment of pooled vehicles, including PFIC and Form 8621, is covered separately in the PFIC primer.

Next step: before you sign anything, or buy into a building where someone else already has, pull two documents: the compound's entry in the Government Authority for Urban Renewal's register, and your city's building plan status for that address, or confirmation that your city has no such plan. Then hand both to the lawyer representing the residents, whose fee the Authority says developers are expected to cover.

Frequently asked questions

TAMA 38 has lapsed. A city-level plan in Hebrew replaces it, in the cities that adopted one, and for pinui-binui neither the tax relief nor the power to compel a holdout exists until the compound is declared. An owner who signed in a language they do not know, unexplained, can ask the Commissioner for Resident Enquiries to void the transaction.