Israel Real Estate Tax Appeals – Ruling on luxury apartments

Introduction

A new ruling was issued by Judge Yardena Seroussi in respect of an appeal to the Real Estate Tax Appeals Committee. The ruling concerned how luxury apartments should be taxed.

Israel Real Estate Tax Appeal – The facts of the case

The Appeals Committee considered whether a land appreciation tax exemption should be granted to several sellers during the sale of a luxury apartment.

It was claimed by the vendors that they were entitled to the full sum of the maximum exemption for a single apartment prescribed by law.

However, the Israel Tax Authority held that the exemption applies only to sales of an entire apartment unit and not each share in a multiple ownership arrangement. Accordingly, it calculated its tax on the maximum exemption per seller—not according to their actual portion of ownership.

The owner of a single apartment is entitled to an exemption from land appreciation tax, up to the amount permitted by law.

At the moment, this amount stands at ILS 4.6 million.

It is worth noting in the case that:

• the apartment sold for in excess of ILS 10 million;
• the vendors were separate family units (a family unit consists of parents and children under 18 years of age); and
• each of the two rights-holders in the apartment applied for an exemption at the full maximum sum.

The decision

The Israel Tax Authority had decided that the exemption was available in respect of the entire apartment rather than to each individual seller.

However, the Appeals Committee ruled that the exemption applied to the sale of a single apartment and therefore the exemption should be granted to each separate vendor.

This was on the basis that the sellers were not part of the same family unit

Is an appeal likely?

It seems quite likely the Israel Tax Authority will appeal this ruling.

If you have any queries about this Israel Real Estate Tax Appeal or Israel tax matters in general, then please do not hesitate to get in touch.

The content of this article is provided for educational and information purposes only. It is not intended, and should not be construed, as tax or legal advice. We recommend you seek formal tax and legal advice before taking, or refraining from, any action based on the contents of this article