Illustration - Building in progress TMA 38 in Tel Aviv (Photo: Reuven Castro)
Necessary correction: The District Court in Tel Aviv recently ruled that apartment owners in a building at 20 Yeftah St. Tel Aviv are entitled to a tax exemption for rent received from a project within the framework of the TMA 38/1 transaction
. Construction. The Tax Authority argued that there should be no tax exemption since "the evacuation of the apartments was not necessary."
The district rejected the position of the Tax Authority and stated that it was proved by the owners of the apartments that this was construction work (included extensions, installation of an elevator, construction of parking lots, upgrading of the lobby and a room the stairs and the construction of 13 new apartments and more), which require evictions from the building and therefore a tax exemption must be granted for a period of 18 months.
"This is excellent news," explains attorney Dan Halpert, an expert in real estate and urban renewal, vice chairman of the National Urban Renewal Committee of the Bar Association, and adds: "In TMA 38/1 projects, it was customary in the past that the apartment owners were not at all The existing apartments are being evacuated during the construction works. This practice was very difficult for the apartment owners who had to live inside a construction site."
Attorney Dan Halpert, Deputy Chairman of the National Urban Renewal Committee of the Bar Association (photo: courtesy of the photographers)
"In recent years," Halpert explains, "the trend has changed and TAMA 38/1 projects include the eviction of the apartment owners.
In such cases, the developer must pay the apartment owners rent for the alternative housing.
The Tax Authority for a long time imposed a tax on these rents and claimed that they constitute additional compensation for the apartment owners, which is not naturally included in the implementation of the TMA 38/1 project
. and good and allows the eviction of the apartment owners from the apartments while the works are being carried out.
But one should pay close attention to the fact that the period of the construction works recognized by the court in the ruling is only 18 months, therefore apartment owners should make sure that if the construction period lasts more than 18 months and a tax is applied to the rent, it is the developer who will pay the tax and not the apartment owners."
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