Thanks for the reminder, Hadar: When is it allowed to register an apartment for the children?
The disclosure of the fact that the chairman of "Burning Youth" owns an apartment, along with her statements that it is in fact her parents' apartment and the reports of the investigation of the case by the Tax Authority, raise questions in the area of taxation of residential apartments. Attorney Uri Goldman, a taxation expert, makes arrangements
Adv. Uri Goldman, guest column
09/19/2022
Monday, September 19, 2022, 10:44 p.m
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Hadar Mokhtar submitted her list to the Knesset: "We came to make life miserable for politicians" (Knesset Channel)
"My father paid for this apartment. It is in my name, but not mine" - said Hadar Mokhtar, "Chairman of Burning Youth", in a series of interviews she conducted yesterday in response to the revelation that she owns a four-room apartment in Haifa. According to all estimates, this statement of Mokhtar is the one who led the Tax Authority yesterday (Monday) to open an investigation against Mokhtar and her parents, on the suspicion that the sales agreement she signed and the apartment registered in her name are nothing more than a fictitious and semblance transaction, perhaps in order to evade paying taxes.
The first question that arises in this context Regarding the issue of payment of purchase tax. The law in Israel grants an exemption from purchase tax to a person who owns only one apartment, up to an amount of NIS 1.8 million. In contrast, a person who already owns an apartment and wishes to purchase another apartment and register it in his name is required to pay a purchase tax that starts at 5% and goes up depending on the price of the property.
Hence, to the extent that Mokhtar's parents own one or more residential apartments, the registration in their daughter's name gives them a significant discount in paying taxes.
However, it is important to note that all the media coverage of Mukhtar is somewhat hypocritical, since many parents usually register real estate properties in the children's names as a gift after purchasing them. Only financial sense, but also a lot of common sense in terms of everything related to preventing family conflicts in the future.
As long as proper disclosure is given all along, such as in the know-the-customer questionnaires with the financial entities and in the reporting to the tax, no problem should arise.
A story riddled with hypocrisy.
The building where Hadar Mokhtar's apartment is located (photo: official website, from Google Maps)
Attorney Uri Goldman (Photo: Amit Shael)
The issue becomes more complicated when the gift is not really such, when the control of the property remains in the hands of one or both parents but the registration is on the child - as for example in the case where the income from renting the property goes into the pockets of the parents - a problem may arise that requires legal representation.
In these cases, the tax authority operates the 'control test', the purpose of which is to examine who really owns the property, and not just who is listed as such.
In cases where it turns out that the person who controls the property is not the one who supposedly received the gift, the tax authority has the authority to issue a tax assessment on all unpaid taxes, including the tax on the unpaid rent - which according to the law is collected in the case of apartments whose rent exceeds NIS 5,300, the purchase tax and more .
And when can such an event become a criminal event?
This, of course, depends on the circumstances and it is difficult to make an equal decision from case to case and to say when any matter becomes criminal, but in general it can be said that when it comes to a serial tax planner - the chances of taking a criminal procedure increases.
As long as it is a sporadic case, it is difficult to see the tax authority resorting to criminal proceedings, although in publicized cases sometimes the conduct of the state is slightly different.
Attorney Uri Goldman is a taxation expert.
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