Reverse Mortgages for Olim: HECM, Aliyah, and Mashkanta Hafucha

Once a year, a US reverse mortgage servicer sends every borrower a form and asks them to certify, in writing, that the house is still their principal residence. If you made aliyah, you cannot honestly sign it. That annual piece of paper is the part of a Home Equity Conversion Mortgage no lifelong Israeli has ever met, and it is why this page exists.

> Not advice. This is general information, not tax, legal or financial advice. Home-country rules (US, UK, Canada, South Africa, Australia) and Israeli rules interact in ways that are easy to get wrong, and a decision that is ordinary on one side of the border can be expensive on the other. Speak to a qualified cross-border professional before acting. Meidahon is an educational publication. No bank, lender, insurer or platform is named or recommended anywhere on this page.

### Where you came from changes the question

• United States. You may already hold a HECM. Aliyah engages a due-and-payable event that federal regulation requires your mortgage to contain.
• United Kingdom. You may already hold a lifetime mortgage. If you take a new one against an Israeli apartment, you leave the FCA perimeter altogether.
• Canada, South Africa, Australia. This page cites no rule in any of the three that decides it for you. Your occupancy clause does.
• Israel. A mashkanta hafucha (משכנתא הפוכה, reverse mortgage) is not a separate regulated product here. It is a housing loan, and the phrase "reverse mortgage" does not appear in the Bank of Israel directives that govern it.

Home country (United States): what does aliyah do to a HECM you already hold?

It makes the whole outstanding balance due and payable, because the loan is written on the condition that the property stays a borrower's principal residence, and it is written that way because a federal regulation says it must be. 24 CFR 206.27(c)(2) requires the mortgage to state that the outstanding loan balance shall be due and payable in full, upon approval of the Commissioner, on any of four events, of which the first, at paragraph (c)(2)(i), is that the property ceases to be the principal residence of a borrower for reasons other than death and the property is not the principal residence of at least one other borrower ³.

The definition is the part that bites. 24 CFR 206.3 defines principal residence as "the dwelling where the borrower and, if applicable, Non-Borrowing Spouse, maintain their permanent place of abode, and typically spend the majority of the calendar year," and then adds flatly: "A person may have only one principal residence at any one time" ⁴. Once Israel is where you spend the majority of the calendar year, the American house is not your principal residence, and there is no reading of the test in which both can be.

Correct the thing you have probably read. The widely repeated "you get twelve months" is not a grace period for moving abroad. A twelve-consecutive-month allowance appears in two places, and neither one is about emigration. In the definition at 24 CFR 206.3 it protects a borrower who is temporarily in a health care institution, provided the stay does not exceed twelve consecutive months ⁴. In the due-and-payable list at 24 CFR 206.27(c)(2)(ii) it covers a borrower who, for a period of longer than twelve consecutive months, fails to occupy the property because of physical or mental illness, and even then only where the property is not the principal residence of at least one other borrower ³. Emigration is neither. The trigger for an oleh is the change of principal residence itself, under paragraph (c)(2)(i). As for the Commissioner's approval named in that paragraph, no waiting period is attached to it anywhere in the text of 24 CFR 206.27(c) ³, so treat it as a step in someone else's process rather than as a clock running in your favour.

For orientation: the HECM is the FHA-insured US reverse mortgage, and 24 CFR 206.33 requires that "the youngest borrower shall be 62 years of age or older at the time of loan closing" ¹. The Consumer Financial Protection Bureau puts the consequence in one line, saying that with a reverse mortgage the amount the homeowner owes goes up rather than down over time, and that these loans "generally must be repaid when you sell or no longer live in the home" ².

So how does anyone find out? Because they ask you. Under 24 CFR 206.211(a), at least once during each calendar year the mortgagee must verify the borrower's contact information and determine whether the property is the principal residence of at least one borrower, and "shall require each borrower to make an annual certification of his or her contact information and principal residence." The mortgagee may rely on that certification "unless it has information indicating that the certification may be false" ⁵. The exposure is not that someone catches you out. It is that once a year you are asked to attest to something that stopped being true the day you landed.

Home country (United States): which HECM protections do not travel with you?

Three of them, and all three exist because a US regulation says so rather than because a lender chose to be generous. Read this section as a list of things to stop assuming, because each one is an assumption an American arriving in Israel carries in unexamined.

Non-recourse is statutory in the US. 24 CFR 206.27(b)(8): "The borrower shall have no personal liability for payment of the outstanding loan balance. The mortgagee shall enforce the debt only through sale of the property. The mortgagee shall not be permitted to obtain a deficiency judgment against the borrower if the mortgage is foreclosed" ³. Searched in full, neither Bank of Israel Directive 451 nor Directive 329 contains any equivalent: no rule limiting the lender to the proceeds of the property, and no bar on pursuing the borrower or the estate for a shortfall ^{11 12}. Where non-recourse exists on an Israeli contract, it is there because someone put it there.

Counselling is compulsory in the US. 24 CFR 206.41(a) requires the mortgagee, at the time of initial contact, to give the prospective borrower a list of the names, addresses and telephone numbers of HUD-approved HECM counselors, and provides that "the borrower, any Eligible or Ineligible Non-Borrowing Spouse, and any non-borrowing owner must receive counseling." Paragraph (c) then requires the counselor to issue a certificate, which the borrower must hand to the mortgagee ⁶. Neither Israeli directive contains any counselling requirement; searched in full, the Hebrew words for advice and for an adviser do not appear in either one ^{11 12}. The related point, that independent mortgage advice in Israel is not a licensed profession, belongs to choosing a mortgage advisor as an oleh.

A spouse who is not on the loan is protected by regulation in the US. 24 CFR 206.55(c)(1) sets the Qualifying Attributes for an Eligible Non-Borrowing Spouse: married to the borrower at closing and for the duration of the borrower's lifetime, properly disclosed and specifically named as an Eligible Non-Borrowing Spouse in the loan documents at origination, and occupying the property as a principal residence ⁷. Paragraph (c)(2) is the trap: a Non-Borrowing Spouse who was ineligible at origination "is not subsequently eligible for a Deferral Period when the borrowing spouse dies or moves out of the home" ⁷.

Press on that last point if you are an olim couple, because the ownership pattern that defeats it is one aliyah produces. If your Israeli apartment sits in one spouse's name, because it came through a foreign inheritance, or was bought before the family arrived, or was simply registered in one name to keep a transfer simple, then the survivor's position rests entirely on the loan agreement. Neither Israeli directive contains anything resembling a Deferral Period for a spouse who is not a borrower ^{11 12}, so whether the survivor can stay in the flat is answered by the Hebrew contract and by nothing else.

One more US mechanic that surprises people: 24 CFR 206.27(b)(7) provides that the payment of monthly mortgage insurance premium "may be added to the outstanding principal balance" ³. The insurance compounds alongside the loan. No premium rate appears on this page.

Home country (United Kingdom): why is an Israeli reverse mortgage outside the FCA?

Because the FCA perimeter is drawn around UK land. Article 61(3)(a) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 makes a contract a regulated mortgage contract where a lender provides credit to an individual or to trustees, the contract provides for the borrower's obligation to repay to be secured by a mortgage on land, and at least 40% of that land is used, or is intended to be used, as or in connection with a dwelling. Article 61(4)(aa)(ii) then defines "land," in relation to a contract entered into on or after IP completion day, as "land in the United Kingdom" ¹⁰.

What that costs you is specific and it is worth naming precisely rather than generally. MCOB 8.5A.1(2) records that "the rules at MCOB 8.6A require firms selling equity release transactions to provide advice to the customer, subject to the customer's right to reject advice which has been given and to proceed on an execution-only basis," and MCOB 8.5A.2 requires a firm that does advise on an equity release transaction to take reasonable steps to ensure the transaction is suitable for that customer ⁹. MCOB 8.6A.4 then sets the conditions before an execution-only sale is permitted at all, including that the customer has rejected the advice given, has identified the particular transaction, and has been told clearly and in a durable medium that they will not have the protection of the suitability rules ²⁰. That is the package: an advised sale by default, a suitability duty on the firm that advises, and a documented opt-out if the customer insists.

A loan secured on a Jerusalem apartment is not a regulated mortgage contract, so none of that attaches to it.

This is not a claim that Israel is worse. Israel has its own disclosure regime, set out below, and it is a different regime rather than a thinner version of the British one. What changed is which document protects you.

If you already hold a UK lifetime mortgage and you are leaving, the honest instruction is narrower than you would like. Neither MCOB 8.5A nor MCOB 8.6A sets an occupancy or permanent-absence trigger, because those sections govern advice and the conditions for an execution-only sale rather than repayment triggers ^{9 20}. The trigger is in your own offer document. Find the "main residence" and "permanent absence" clauses and read them before the flight, not after.

Canada, South Africa or Australia: what is the one question to ask before the flight?

Ask the lender, in writing, what permanent emigration does to your contract, because this page cites no rule in any of the three that answers it for you. Every reverse-mortgage or equity-release product is written on a home the borrower occupies, so an occupancy condition exists somewhere in your paperwork. What it triggers, and on what notice, is a commercial term. Get it from the lender in writing rather than from any general guide, this one included. Do it while you are still a local customer with a local phone number, because the same question asked from Israel a year later is a different conversation.

Israel: which rulebook actually covers a mashkanta hafucha?

The ordinary housing-loan rulebook does, if the lender is a bank, because Israel has no separate regulatory category for a reverse mortgage. Bank of Israel Proper Conduct of Banking Business Directive 451, version 22 (7/23), section 3 defines a housing loan through four limbs, provided the loan was not given for a business purpose, and limb (3) is simply that the loan was given against a mortgage on a residential apartment ¹¹. A reverse mortgage sits squarely inside limb (3), which pulls the whole of Directive 451 over it.

Directive 329, version 13 of 30 June 2026, section 1 then adopts that same definition and adds a qualifier only a newcomer trips over: it applies in relation to a residential apartment in Israel ¹². If you still own a house in Cleveland or in Golders Green, it is not inside this rulebook, and an Israeli bank is not lending against it under these directives. Three further consequences follow, and each corrects an assumption olim import from reading about ordinary mortgages first.

• The 75% figure is not the number to ask about, but "no limit" is the wrong conclusion. The loan-to-value ceilings in section 2 of Directive 329, version 13 of 30 June 2026, namely 75% for a single apartment, 70% for a replacement apartment and 50% for an investment apartment, are each written as applying to a housing loan taken for the purpose of acquiring a real-estate right ¹². A reverse mortgage acquires nothing, so section 2 does not speak to it directly. But the directive does not stop there. Section 4 bars a bank from approving a housing loan whose total loan-to-value, together with the balance of earlier loans secured on the same apartment, exceeds those same rates; and section 10A then permits a banking corporation not to apply the section 4 limit to a housing loan that is not for the purpose of acquiring a real-estate right, up to a loan-to-value of 70%, provided the amount by which it exceeds 50% does not exceed NIS 200,000, all three figures as they stand in version 13 of 30 June 2026 ¹². In other words the directive does contemplate non-purchase housing loans and does put numbers around them. Ask the lender, in writing, which of those sections it is applying to your file and at what percentage. Do not carry over the headline ceiling from how much you can borrow as an oleh, and do not accept "there is no limit" either.
• The repayment-to-income cap is written for loans that have repayments. Section 5 of Directive 329, version 13 of 30 June 2026, bars a banking corporation from approving or executing a housing loan with a repayment-to-income ratio above 50%, and section 6 requires a 100% risk weight where that ratio exceeds 40% ¹². Appendix A to the same directive defines that ratio as the monthly repayment divided by net disposable monthly income, and it tells the bank what to count in unusual structures: for bullet and balloon loans, the monthly interest payment; for grace loans, the expected monthly payment at the end of the grace period ¹². Do not read that as leaving a reverse mortgage outside the cap. Section 1 of the same directive defines a bullet or balloon loan as one whose principal balance is repaid in full at the end of the term, whether or not interest is paid over the life of the loan ¹², which is the shape a reverse mortgage has. What the directive does not do is name a reverse mortgage or say which of those structures a lender should slot one into. Ask which line the bank is applying to your file rather than assuming the cap cannot reach you. That cap is also the mirror image of the underwriting picture in mortgages with foreign income and no Israeli credit, and it is why this product surfaces for a retirement-age oleh with an empty file in the Israeli credit system: the assessment leans on your age and your property rather than on an Israeli income and credit record you have not had time to build.
• There is one hard limit, and it is the term. Section 8 of Directive 329, version 13 of 30 June 2026, states that a banking corporation shall not approve or execute a housing loan with a final repayment period exceeding 30 years ¹². Read straight through, the directives do not let a bank leave the balance compounding indefinitely. Two cautions. "Final repayment period" is defined in section 1 by cross-reference to the Bank of Israel's reporting directive 877, section 15, rather than in Directive 329 itself ¹², so ask the lender how they count it. And this page cites no supervisory guidance applying section 8 to reverse mortgages specifically, so treat the cap as what the directive says rather than as settled practice. Section 7 of that same version separately limits the variable-rate portion of a housing loan to 66.66% of the loan ¹²; the track mechanics behind that sit in Israeli mortgage tracks.

Two negatives are worth stating precisely, because both are widely assumed the other way. Searched in full, neither Directive 451 nor Directive 329 uses the Hebrew for "reverse mortgage" anywhere, and neither sets any minimum borrower age ^{11 12}. The age at which a lender will write one is therefore a term you negotiate and read, not a protection the regulator has given you. If you are arriving with an American frame of reference, that is the sharpest single difference on this page: 24 CFR 206.33 fixes 62 as a federal floor and puts it beyond the lender's reach ¹, and nothing in the Israeli rulebook does that work.

Finally, both directives are addressed to a banking corporation, Directive 451 expressly by reference to the definition in the Banking (Service to Customer) Law 5741-1981 ^{11 12}. If your lender is not a bank, none of the above is what governs your contract, and this page does not identify who supervises it instead. Ask, in writing, which licence the lender holds and which authority issued it, and get the answer before you sign anything. A newcomer is unusually exposed on exactly this point, because the ordinary Israeli way of knowing whether a lender is a bank, a branch you have used for thirty years and a name your neighbours grew up with, is a signal you have not had time to acquire.

Israel: what is the one Hebrew phrase you should demand before signing?

Ask for the ha-ribit ha-kolelet ha-chazuya (הריבית הכוללת החזויה, the projected total interest, which the directive itself glosses as the real cost of the credit). Directive 451, version 22 (7/23), carries a separately lettered section 4C, headed approval in principle and holding the interest rate. Its subsection (b) requires the aishur ekroni (אישור עקרוני, approval in principle) to be delivered in writing in the structure and content of Supplement 6, and the numbered items in that subsection do the work: item (6) is the ha-ribit ha-kolelet ha-chazuya, computed under the formula in Supplement 4; item (7) is the total projected amount payable to the end of the loan term, computed under the same supplement; item (8) refers early-repayment fees, as regards interest differentials, to the Banking Order (Early Repayment of a Housing Loan) 5762-2002 ¹¹. Watch the numbering, because it is easy to cite wrongly: section 4C is not subsection (c) of section 4. Section 4(c) is a different requirement, obliging every bank to make a public online calculator available that runs simulations of different loan mixes over different time horizons and displays the same projected-total figure ¹¹.

Two process facts in section 4C matter more to a newcomer than to a native. Under subsection (a)(1) the approval in principle is given at a stage where no costs are imposed on the applicant, so the mandated figure is obtainable before you have paid anything. And under subsection (a)(4) the bank must set a period, not shorter than 24 days from the date of the approval in principle, during which you can still take the loan on those terms while you produce the documents that verify your data, and it must state that period prominently in the approval ¹¹. Twenty-four days is comfortable if your paperwork is in a drawer in Netanya. It is tight if it has to come from a county recorder, a foreign pension administrator or a sibling with a key to a house you no longer live in. Start collecting before you ask.

The compounding, in other words, is not hidden in Israel. There is a mandated number that shows it. The newcomer's problem is that nobody tells a new arrival what that number is called, and Directive 451 carries no language accommodation at all. Searched in full, the directive contains none of the Hebrew words for English, Arabic, Russian or language; its only occurrences of a word for translation are arithmetic, an instruction to convert a monthly rate into annual terms ¹¹. The disclosure regime is real, and it is in Hebrew, which is the general problem covered in signing Hebrew paperwork you cannot read.

Get two more things in writing at the same appointment. First, the recourse position, because no rule in either directive guarantees that you or your heirs will not owe a shortfall if the balance outgrows the flat, so the answer is in the clause or it does not exist. Second, the early-repayment fee if the loan is repaid after your death. Directive 451 sends that question to the 2002 Banking Order ¹¹, and this page does not open that Order, so whether it relieves the fee on a repayment following death is a question to put to the lender rather than one to assume. Ask it and keep the answer with the will. The same applies to a move into diur mugan (דיור מוגן, sheltered housing), commonly described as a repayment trigger but not imposed as one by anything in Directive 451 or 329 ^{11 12}. Find the clause.

### Who sets what, and in which rulebook

"Not in" above means the requirement does not appear in the instrument named in that cell. It is not a statement that no such rule exists anywhere in that country's law.

How fast does the balance actually grow?

This is the section where an oleh's position differs from a native's for a reason that has nothing to do with regulation: the balance compounds in shekels, while the people who will eventually deal with it are very often doing their mental arithmetic in dollars or pounds, in another country, years from now. So the number worth watching is the count of years, not the rate. A balance that accrues at a constant compounded annual rate r doubles in ln(2) divided by ln(1+r) years. That is pure arithmetic. None of the rates below is any lender's price, an Israeli market figure or a forecast of anything.

Worked example, arithmetic only. Take NIS 500,000 drawn as a single lump sum at age 68, with nothing repaid. At an illustrative 5% compounded annually, after 18 years the borrower is 86 and the growth factor is 1.05 raised to the power of 18, which is 2.4066. Multiply: 500,000 times 2.4066 is about NIS 1,203,000, of which roughly NIS 703,000 is accrued interest on a NIS 500,000 draw. Run the same draw to the 30-year outer limit in section 8 of Directive 329 and the factor is 1.05 to the power of 30, or 4.3219, giving about NIS 2,161,000. Change the rate and the shape does not change, only the speed: at an illustrative 7% the same NIS 500,000 reaches roughly NIS 1,690,000 by age 86.

If your loan is a US HECM there is a second layer, because monthly mortgage insurance may be added to the outstanding principal balance and then compounds along with everything else ³.

There is a second oleh-specific reason this arithmetic lands harder. Where the Israeli apartment was bought outright with the proceeds of a sold foreign home, there is no existing mortgage limiting what can be released, so the whole asset is available from day one and the largest possible number is the easiest one to say yes to. Decide now which currency each heir will be doing this arithmetic in, and write it down next to the figures.

None of this replaces the mandated figure. Ask for the ha-ribit ha-kolelet ha-chazuya on your own numbers, put it next to this table, and if the lender's projection sits far below the arithmetic, ask which assumption is doing the work.

Why does releasing home equity reach an oleh's benefit differently from a native's?

Because the two are usually on different benefits. A lifelong Israeli at 70 draws an old-age pension paid regardless of income, while an oleh who first immigrated after the age the law names is on a benefit the Institute says stays income-tested even after 70. Note the age that matters for that fork: it is not retirement age for everyone. The National Insurance Institute states the first half in a single sentence: "The old-age pension is paid either from retirement age according to the level of income of the insured, or from the age of entitlement to old-age pension (age 70) regardless of the level of income" ¹³. Its retirement-age page adds that a person who reaches retirement age is entitled to the pension provided they pass an income test, and that income from a pension from work is not taken into account ¹⁴; read with the sentence above, the test therefore runs from retirement age up to the age of entitlement ^{13 14}. As the Institute publishes those ages in August 2026, retirement age is 67 for men and, for women, 62 to 65 depending on date of birth, reaching 65 for births from 1/1970 onwards ¹⁴. The women's age is mid-phase-in, so read it off the Institute's table rather than off a number you were told.

The same page draws the line between the two populations. The ordinary old-age pension reaches "any Israeli resident born in Israel or who first immigrated before the age retirement prescribed by the law (62 for men or retirement age for women)," and "a person who first immigrated to Israel after that age may be entitled to a special old age benefit" ¹³. The Institute's page on that benefit carries the warning in its own words: "Important: unlike the regular old-age pension, the special old-age benefit is subject to an income test even after the age of entitlement to an old-age pension" ¹⁵.

Now the mechanism, and here it matters exactly which rules the Institute has published for which benefit, because they are not all the same page. For the special old-age benefit, the Institute publishes a work-income ceiling and, separately, a non-work-income condition: a person may be eligible if his and his spouse's non-work income does not exceed the amount of the old-age pension plus the increment of income supplement to which he is entitled by family composition and age ¹⁵. It does not, on that page, spell out how a lump sum of released equity is valued inside that test. Two neighbouring publications show the direction the Institute's rules run. For the income supplement to an old-age pension, eligibility takes into account gross income "from work and sources other than work (such as car, real estate, financial assets and more)" ¹⁷. And in the Institute's income-calculation rules published for income support, "Assets - all assets are taken into account for benefit calculation purpose, including assets that do not produce income (except the apartment of the insured)," while "the amount of income from financial assets is determined based on the rate of interest in the economy, family status, number of children and age of the person claiming the benefit" ¹⁶.

Put those together and you have the shape of the risk rather than a certainty. In the rules the Institute has published for income support, the apartment you live in is the asset singled out for exclusion, and financial assets are counted by deeming them to produce income ¹⁶. A reverse mortgage converts part of the excluded asset into the counted kind. Be precise about who that reaches, because the neat version of this claim is wrong. A native at 70 draws the ordinary old-age pension regardless of income, so the pension itself is not at risk ¹³; but if that native also draws the income supplement, which is income-tested at any age and counts income from sources other than work such as financial assets, the supplement can be ¹⁷. The oleh's exposure differs in kind rather than in degree: on the special benefit it is the whole payment, not a top-up sitting on top of a safe pension, that the income test reaches ¹⁵.

Three guardrails on that warning, and they matter. It applies differently to an oleh who arrived young enough to build a contributory record and is now 70 or over on the ordinary old-age pension; that person is in the native's position, base pension safe and any income supplement still exposed. No threshold or taper is published here, because those figures are reset each January. And because the special benefit's own page does not state the asset treatment, the only reliable answer is the Institute's. Run the National Insurance Institute's own benefit calculator with a stated lump sum, then ask Bituach Leumi (ביטוח לאומי, National Insurance) at your local branch, in writing, what that specific sum does to your benefit, before you draw anything. The benefit menu itself belongs to benefits for olim who arrive after retirement age. This is a different benefit from the long-term-care one, and the parallel question of why a foreign pension sits inside an income test is answered in long-term care and bituach siudi.

What do your heirs actually inherit?

The apartment and the debt attached to it, because the loan does not die with the borrower. It stays secured on the flat and keeps compounding until someone pays it, and the heirs' choice is to repay from other funds or to sell. Israeli succession procedure and the Israeli estate-tax position belong to Israeli inheritance law for olim; the tax consequences of the sale sit in mas shevach and, for a US-citizen seller, in selling your Israeli home as a US citizen.

The newcomer-specific texture is that your heirs are usually not in the country. A native's children handle this from Ramat Gan. Yours may be handling it from New Jersey or from Manchester, in Hebrew, across a seven-hour time difference, on a clock, while the balance grows every month the estate takes to settle. That is an argument for the paperwork being findable, and translated, long before it is needed, alongside the continuing power of attorney and the foreign-power-of-attorney problem set out in financial protection for elder olim.

The US estate side. 26 CFR 20.2053-7 allows a deduction from a decedent's gross estate for the full unpaid amount of a mortgage on property of the gross estate, including interest accrued to the date of death, provided the value of the property undiminished by the mortgage is included in the gross estate. Then it forks: "If the decedent's estate is liable for the amount of the mortgage or indebtedness, the full value of the property subject to the mortgage or indebtedness must be included as part of the value of the gross estate; the amount of the mortgage or indebtedness being in such case allowed as a deduction. But if the decedent's estate is not so liable, only the value of the equity of redemption (or the value of the property, less the mortgage or indebtedness) need be returned as part of the value of the gross estate" ¹⁸. The regulation also confirms that only interest accrued to the date of death is allowable, even where the alternate valuation method under section 2032 is elected ¹⁸.

Whether the estate is "so liable" turns on whether the Israeli loan is recourse or non-recourse, and neither Israeli directive supplies that answer ^{11 12}, which leaves the contract. So a Hebrew sentence negotiated with an Israeli lender decides how an Israeli apartment enters a US Form 706, and nobody at either end of that conversation is thinking about the other end. That single clause is the most consequential thing on the page for a US-citizen oleh, and it is the one most likely to be signed unread.

Treaty: is there a US-Israel treaty that resolves any of this?

No. There is no US-Israel estate or gift tax treaty at all. The IRS list of US treaties carrying estate or gift tax provisions names Australia, Austria, Canada, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Japan, Netherlands, South Africa, Switzerland and the United Kingdom, and Israel does not appear on it ¹⁹. Nothing reconciles the two estate systems for you, which is why the recourse clause above does its work unmediated.

The income tax convention between the two countries has nothing to allocate on the US side either, and for a reason worth stating plainly rather than assuming: for US purposes the draws are loan advances and not income ⁸, so there is no item of US income for a treaty to assign to one country or the other. This page cites no Israeli source on how a draw is characterised in Israel, so put that half to an Israeli tax adviser rather than reading the US answer across. On the US side, then, a reverse mortgage is one of the few cross-border money flows in an oleh's life where the treaty question has no answer because there is no question. The computation, the non-citizen threshold and the Form 706 versus 706-NA choice are handled in US estate tax for olim, and mixed-citizenship couples should read it alongside US estate tax and a non-citizen spouse and cross-border wills.

South African and British olim sit differently: both countries do appear on that IRS estate-treaty list ¹⁹, and UK inheritance tax after aliyah is covered in UK inheritance tax and long-term residence.

Where does the money go, and what does that cost a US citizen?

Check the destination before you draw, because for a US-citizen oleh the obvious home for a lump sum can be the expensive one. A US person who is a direct or indirect shareholder of a passive foreign investment company files Form 8621 in the circumstances the IRS lists, including an annual report required under section 1298(f) ²¹. Whether a particular Israeli pooled fund is such a company, and what the regime then costs, is the whole subject of the PFIC problem. The inheritance angle sharpens it, because a holding bought with reverse-mortgage money does not tidy itself up at death, so one decision reaches the family twice.

On the US treatment of the money itself, IRS Publication 936 (2025) is unambiguous. Under "Reverse mortgages": "Because reverse mortgages are considered loan advances and not income, the amount you receive isn't taxable. Generally, any interest (including original issue discount) accrued on a reverse mortgage is considered interest on home equity debt and isn't deductible" ⁸. Two consequences follow, and the second is the one people forget. The draws are not income, so a monthly draw is not a pension and does not become one by arriving monthly. And the accrued interest is not deductible at all: Publication 936 treats it as interest on home equity debt and says it isn't deductible ⁸, so the balance compounds year after year and throws off no US deduction along the way.

FBAR, in one line: what the report captures is accounts, and the Israeli account the draws land in is one. A US person must file FinCEN Form 114 to report a financial interest in, or signature or other authority over, at least one financial account located outside the United States, where the aggregate value of those accounts exceeded USD 10,000 at any time during the calendar year ²². That same test reaches a US-person adult child who is given signature or other authority over the account in order to help, because signature or other authority counts even without a financial interest ²²; the practical handling of that sits in financial protection for elder olim.

One neighbouring decision is worth naming. For many retirement-age olim the real choice is between drawing down a foreign pension and drawing down the house. Pension taxation and the ten-year window are in the retiree aliyah pension tax guide, and on the US side reverse-mortgage draws do not enter that analysis as income, because Publication 936 (2025) treats them as loan advances rather than income ⁸. And if the property on your mind is the one you left behind rather than the one you live in, the keep-or-sell branch is in sell or rent your home before aliyah, which assumes an ordinary mortgage or none. A reverse mortgage already sitting on that house is the branch this page adds.

Before you sign or draw anything, do three things: ask the lender in writing for the ha-ribit ha-kolelet ha-chazuya on your own numbers and for the recourse clause in plain terms; ask Bituach Leumi at your local branch what a stated lump sum does to your benefit; and, if you hold a US HECM, contact the servicer about the principal-residence certification before the next one arrives. Then read how much you can borrow as an oleh, so you know which ordinary doors are actually closed before you choose this one.

Frequently asked questions

Aliyah makes a US HECM due and payable: the American house stops being your principal residence, and the servicer asks you to certify that in writing every year. Israel has no separate reverse-mortgage regime, so a bank-issued mashkanta hafucha is an ordinary housing loan under Bank of Israel Directives 451 and 329, with no non-recourse rule in either.