Selling an apartment
Selling an apartment you inherited
An inherited apartment is not only an emotional matter. To sell it you need to put the legal side in order, check when the betterment tax exemption applies, and reach agreement among the heirs. Here are the steps, in order.
What needs to be arranged before the apartment is advertised?
The first step is an inheritance order (when there is no will) or a probate order. The application is filed with the Registrar of Inheritance Affairs and can be filed online on the Ministry of Justice website. Without an order nobody is authorized to sell, and the buyer and the buyer's lawyer will not move forward.
The second step is registering the rights in the heirs' names at the Land Registry Office. As a rule, the rights are first registered in the heirs' names and only then transferred to the buyer. The sale process can start in parallel, but the payment schedule in the contract must fit the date on which the registration will be completed, and may be subject to a deposit. For this reason it is advisable to complete the registration as early as possible, even without a sale.
Our office handles every stage: the application for an inheritance order or probate order, registering the rights in the heirs' names at the Land Registry Office, and drafting the sale contract and accompanying the transaction until the apartment is registered in the buyer's name.
When is the sale exempt from betterment tax?
Section 49B(5) of the Real Estate Taxation Law exempts the sale of a qualifying residential apartment received by inheritance, when three conditions are met together:
- The seller is the spouse of the deceased, a descendant of the deceased, or the spouse of a descendant.
- Before death, the deceased owned only one residential apartment.
- Had the deceased been alive and sold the apartment, the sale would have been exempt from tax.
When the conditions are not met, we check whether the heir is entitled to another exemption, for example the single-apartment exemption under section 49B(2). You can start the calculation with the site's betterment tax calculator.
You inherited part of an apartment. Does it affect the exemption on your own apartment?
Not necessarily. Section 49C of the law provides that an inherited apartment in which your share does not exceed one half is not counted as an additional apartment when you sell your own apartment with the exemption under section 49B(2). The same applies to an inherited apartment that meets the first two conditions of section 49B(5). This check is especially important before you sell the apartment you live in.
What happens when the heirs do not agree?
Each heir is a co-owner of the apartment, and each co-owner may sell their share without the consent of the others (section 34 of the Land Law). In practice it is hard to sell a share of an apartment at full value. When there is no agreement, any co-owner may demand the dissolution of the co-ownership (section 37), and where the apartment cannot be divided, the court orders its sale and the division of the proceeds (section 40). How this looks in a real case: the article on dissolving co-ownership of an apartment inherited by siblings on the il-law site.
One of the heirs is a minor?
When one of the heirs is a minor, the parents may not sell the minor's share of the apartment without prior approval (section 20(a) of the Legal Capacity and Guardianship Law). On the approval and the timetable, see the article on a minor's apartment.
Related articles and pages: Selling an apartment | Betterment tax calculator | Dissolving co-ownership of an apartment inherited by siblings | A minor's apartment
Questions and answers
Is there purchase tax when you receive an apartment by inheritance?
No. Inheritance is not a sale under section 4 of the Real Estate Taxation Law, so there is no purchase tax and no betterment tax. Tax is examined only when the heirs sell the apartment.
Can you sell before there is an inheritance order?
You can negotiate and prepare the contract, but you cannot complete the transaction. Without an order nobody is authorized to sell.
The deceased owned two apartments. Is there an exemption?
The exemption under section 49B(5) requires that the deceased owned only one residential apartment. When there were two apartments, other exemptions are checked, according to the situation of each heir.
Not sure the deal is safe? Let's start with a conversation
In an initial conversation we will go over the property, the other party and the payment schedule, and tell you what needs to be checked before you sign.