Real estate taxation · Position Paper
Professional Position Paper No. 03/2024, Israel Tax Authority. Field: Real Estate Taxation Law. Subject: Sale of building rights in a TAMA 38/2 transaction and purchase of construction services from the contractor for cash
Summary
Israel Tax Authority Professional Position Paper 03/2024 addresses apartment owners in a TAMA 38/2 transaction (strengthening by way of demolition) who sell to the developer only part of their building rights. For the part sold, the owners are entitled to a proportional exemption from betterment tax, and for the balance of the rights they may be regarded as ordering construction services from the developer for full monetary consideration, which do not necessarily constitute a "sale" of a right in real estate. The Real Estate Taxation Director will examine the reasonableness of the transaction, among other things against the customary combination rate in the area, the rate of sale of the other residents and the cost of customary construction services in the market. If it is determined that the payment to the developer is a sale of a right in real estate and not a payment for construction services only, the purchase tax will be calculated as for the purchase of a built residential apartment under section 9 of the Law.
The summary was written by the office and reflects the instruction as of its publication date. The binding text is the official Hebrew publication, and the instruction may have been updated or affected by later legislation and case law. The English title and summary are an unofficial translation.
Publication details
- Type
- Position Paper
- Number
- 3/2024
- Publication date
- 15.10.2024
- Topics
- Urban renewal, Betterment tax, Purchase tax
- Sections of the Law mentioned
- 9
Official document
Source: The publication on the Israel Tax Authority website (gov.il, Hebrew)
Suggested citation
Israel Tax Authority, Position Paper 3/2024, "Professional Position Paper No. 03/2024, Israel Tax Authority. Field: Real Estate Taxation Law. Subject: Sale of building rights in a TAMA 38/2 transaction and purchase of construction services from the contractor for cash" (15.10.2024) [Hebrew]
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