Most apartment transactions follow a familiar route: checks, contract, reporting and registration. A complex transaction is one where that route is not enough: there are several owners, an estate that has not been divided, land handed to a developer, a gift within the family, unauthorised construction or a commercial property. In these transactions the important decisions, above all the tax decisions, are made before signing.
You can get an initial tax estimate with the betterment tax calculator and the purchase tax calculator, and tax planning is covered in detail on the tax planning page.
A landowner sells part of the land to a developer and receives in exchange apartments or space to be built. The tax is calculated on the signing date, even though the apartments will be handed over only years later, so the security in the contract and tax planning are at the heart of the transaction.
Before a sale you need a succession order or probate order and registration of the rights. Where there are several heirs, it is sometimes possible to divide the estate assets between them by an agreement between heirs without the division being treated as a sale, and to choose who receives which asset so that the tax is lower. That choice is made before selling.
Every co-owner of jointly owned land is entitled at any time to demand partition (section 37 of the Land Law, 5729-1969). Land that can be divided is partitioned in kind, and land that cannot be divided is sold and the proceeds are divided (sections 39 and 40). For tax purposes, a division between all the co-owners is exempt where no balancing payment was made (section 67 of the Real Estate Taxation Law). Representation covers both negotiating an agreed arrangement and court proceedings where there is no agreement.
Transferring an apartment without consideration to a relative is exempt from betterment tax (section 62(a)). A "relative" for this purpose is a spouse, parent, grandparent, descendant, the spouse's descendants and their spouses, and also a brother or sister for a right received from a parent or by inheritance. The recipient pays reduced purchase tax, one third of the regular tax. It is also worth checking the effect on the tax when the recipient later sells the apartment, and the rules of the Gift Law: an undertaking to make a gift in the future requires a written document, and the giver may withdraw in certain circumstances (section 5 of the Gift Law, 5728-1968).
An addition that was never regularised, an enclosed balcony or a change to the internal layout affects the apartment's value, the mortgage and the seller's liability. We check what is built against what was permitted, and the contract states who bears the risk.
When buying land or a property that is not a residential apartment, purchase tax is 6% of the property's value, and where the seller is a business, VAT is usually added. Where the property is held by a company all of whose assets are real estate (a "real estate association"), a sale of shares in the company is also taxable under the law (section 9(b) and section 7A). It is worth checking in advance whether to buy the property itself or the company that holds it.
Several apartments in the family, an apartment bought before 2014, a replacement apartment, additional building rights, a sale above the exemption ceiling or acquisition in instalments: in all of these, the order of actions determines the amount of tax. Good planning chooses between the routes the law itself offers, and is documented so that it holds up before the Tax Authority.
The office built the tax calculators on this site according to the wording of the law and the regulations, so that scenarios can be tested before deciding. The calculators adapt the calculation to the transaction date, show the underlying assumptions and sources, and show a detailed result. The full report can be sent to you by email as a PDF.
A calculator result is an estimate only and is not an assessment or advice. In a complex transaction the calculator is a starting point for the review, not a substitute for it.
Who the owners are, what is registered in the land registry, the actual state of the property, what other properties the family holds, and the goal: sale, division, transfer or construction.
Calculating the tax under each possible route, using the calculators and the relevant assessments, and comparing them in numbers.
Choosing the structure, drafting the agreements, security and timetables, and negotiating with the other side.
Filing the declarations with the Tax Authority, exemption requests, handling the assessment, and registering the rights in the land registry.
Several owners, an undivided estate, consideration that is not cash (as in a combination deal), a transfer between relatives, unauthorised construction, a commercial property, or a situation where the order of actions changes the tax. All of these need planning before signing.
A transfer without consideration to a relative is exempt from betterment tax under section 62(a) of the Real Estate Taxation Law, and the recipient pays one third of the regular purchase tax. The implications for a future sale and for the parents should be checked in advance.
Every co-owner is entitled to demand partition under section 37 of the Land Law. If there is no agreement, the court orders partition in kind, or a sale and division of the proceeds where the property cannot be divided.
The calculator handles several sellers, acquisition in instalments, inheritance and gifts, building rights and real estate associations, so it is suitable for an initial review of scenarios. The result is an estimate, and in a complex transaction it is checked against the documents before reporting.
Before signing anything, and preferably before advertising the property or receiving an offer. After signing, most planning options are already closed.
In one meeting we map the properties, the owners and the goals, and calculate the scenarios before you decide.
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