Ever heard about buying apartments at a discount in Israel and wondered, “What’s the catch?” Well, you’re not alone. Let’s dive in together and understand exactly how these discounted apartment programs work in Israel—no complicated jargon, promise!
What’s a Discounted Apartment Program, Anyway?
In Israel, the government offers special programs to help people buy apartments at lower Prices. You might have heard of the old “Buyer’s Price” program—this new program called “Discounted Apartments” works a bit diffeRently.
Understanding the Pricing (Easy Version)
First, if you visit the government website and see the listed price for an apartment, remember:
- This price doesn’t include VAT (Value Added Tax).
- You need to add VAT to get the actual base price.
So, step one is adding VAT to the listed price. Got it? Awesome.
Calculating Your Actual Discount
After you’ve figured out the real price, the fun part begins: working out your discount. This is where a lot of explanations go wrong. There aren’t two discount “options” to pick from. In the target-price track (מחיר מטרה, mechir matara), the main Dira BeHanacha route since October 2021, the rule is one formula.
The Rule: A Percentage or a Fixed Sum, Whichever Is Lower
Developers in the target-price track must sell to eligible buyers at a discount of 25% of the open-market price or ILS 550,000, whichever is lower. That’s the rule after the Israel Land Council’s last update in July 2025, as summarised by the Knesset Research and Information Center in January 2026. Projects tendered before that update were sold under the terms in force at the time, so check the terms of the specific project you’re registering for.
A worked example with those figures: say a comparable apartment sells for 1,000,000 shekels on the open market. 25% of that is 250,000 shekels, which is lower than 550,000, so the required discount is 250,000 shekels and the eligible buyer’s price comes to about 750,000. The fixed sum only takes over for apartments worth more than 2,200,000 shekels on the open market, because that’s where 25% would pass 550,000.
What Recent Tenders Actually Showed
The formula sets the required discount. The tender results the Israel Land Authority publishes often show more than that, and they vary a lot from city to city:
| Project | Announced | Discount from open-market price | Starting price, about 85 sqm |
|---|---|---|---|
| Kfar Vradim, Phase C | 6 Mar 2025 | 29% to 32% | ILS 1,275,000 |
| Nahariya, Sa’ar neighbourhood | 5 Jan 2026 | about ILS 600,000 | ILS 701,000 |
| Rehovot, Kiryat Moshe | 25 Mar 2026 | about ILS 613,000 to 843,000 | ILS 1,476,000 |
| Karmiel, Ramat Navon | 5 Aug 2026 | about ILS 372,000 to 511,000 | ILS 1,117,000 |
These are the Authority’s estimates at the tender stage, and the announcements say every apartment includes a balcony, a storage room and parking. Results come out months after a tender is issued (the Rehovot one was tender 472/2024), so each project reflects the terms of its own tender. Source: Israel Land Authority tender result announcements for Kfar Vradim, Nahariya, Rehovot and Karmiel, checked 29 Oct 2026.
There’s also a reason you won’t find new target-price projects in expensive cities. Under the current rules, land for the track is marketed only in localities where the average apartment price is below ILS 20,000 per square metre including VAT, or in localities in socio-economic clusters 1 to 4. In January 2026, 128 localities met those conditions, and since the switch in 2021 discounted apartments are no longer marketed in high-price cities such as Herzliya and Ramat Gan. For the full picture of the tracks and eligibility, see our guide to Dira BeHanacha housing programs, and for the history, how Mechir LaMishtaken turned into Dira BeHanacha.
Important Note: You Can’t Predict Your Exact Discount Early
Here’s something crucial to understand:
- The exact discount only becomes clear AFTER you win the right to buy the apartment.
- Your final discount depends on various factors such as:
- The exact apartment you choose
- The city or neighborhood of the project
- The specific building company developing the project
In short, you won’t know exactly how much you’re saving until you’ve secured your apartment. No calculator or early prediction can give you this precise number ahead of time—so keep that in mind!
Tips Before You Jump In (Actionable Steps)
Here are a few quick tips to make your life easier:
- Always factor in VAT when checking initial prices.
- Stay flexible—remember, your exact savings are only revealed at the end.
- Be prepared financially; discounts are amazing but you’ll still need funding and possibly a mortgage.
- Know what you’re buying. A target-price apartment is built to at least the binding specification (מפרט מחייב, mifrat mechayev) in the tender booklet, and you can’t drop items from it except a short list, such as the kitchen cabinet, in exchange for a credit. Read the specification of your project, not a general one.
The Short Version: Add VAT Before the Discount
- In the target-price track the discount follows one formula: 25% of the open-market price or ILS 550,000, whichever is lower. Recent tenders have often gone further.
- Prices listed initially exclude VAT—remember to add it!
- The exact savings depend on the project, city, and builder, revealed only after securing the apartment.
- Always plan your finances with these points in mind.
This is general information, not legal or tax advice; confirm with a licensed professional.
Feeling confident now? Good luck finding your dream apartment!
For buyers, sellers and investors working through this in Israel, see the Semerenko guide to profitable real estate investment in Israel. For personal guidance, contact the Semerenko Group team.
