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Did you sell a property registered in the name of one of the spouses? This is how you can reduce the liability tax Real Estate Magazine

Did you sell a property registered in the name of one of the spouses?

This will reduce your liability tax

  • If it is a substantially common property, it can be claimed for sharing from the date of purchase


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Produced by the Department of Special Supplements

The Real Estate Taxation Law applies to the sale of contractual rights, so when a married person acquires a right in real estate after the formation of the family unit, and the contract is registered in his name only, in real estate taxation registers the property is registered in full in the name of the buyer.

This is even if it is an asset that is materially jointly owned by both spouses.

What will happen at the time of the sale of the property for praise tax purposes?

At the time of the sale the couple will claim that it is a joint property of both of them, and therefore they will seek to apply a co-ownership claim.

However, since the claim for sharing in the assets according to the rule of sharing is a proprietary claim, in this case a gap is created between the formal ownership of the property and the material ownership.

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This gap will not be reflected in the assessment of a real estate tax manager, and thus the appreciation tax assessment that will result in the sale of the property will only apply to one of the spouses (the same spouse who was registered at the time of purchase as the property buyer in the purchase contract).

As a result, the liability of the goodwill tax at the level of the family unit will be higher.

Why is a higher praise tax paid


Praise from the sale of a property constitutes taxable income.

Attributing income from the sale of a joint property to one spouse, passing a split between the two, will result in a higher praise tax payment (inability to make a tax spread, differences in marginal tax rates, utilization of credit points or personal exemptions, etc.).

If so, how can the goodwill tax liability be reduced?

Insofar as it is indeed a jointly owned property, registered in the name of one of the spouses, the spouses must apply for real estate taxation and claim to have shared the property from the date of its purchase.

Raising an argument for the exercise of the cohabitation presumption requires proof, i.e. a presumption on the part of the spouses who intended to maintain a regime of de facto co-ownership of their assets.

A circular published by Real Estate Taxation, which deals with the applicability of the family unit, cites a number of examples that can support the rule of cohabitation between spouses.

For example: joint residence, joint financing, joint mortgage payment, rent paid to a joint bank account and any action that proves full cooperation between the spouses.

It can be seen that this is a technical split of the appraisal, a split that does not require any appraisal procedure on behalf of the director of real estate taxation.

Thus, instead of an assessment being made only in the name of one spouse, the assessment will be made in the name of both spouses and the tax liability paid at the family cell level will be a real tax payment - that is, the real tax to be paid on the actual profit to the family cell.

Beware of tax accidents.

However, in the event that spouses seek to anchor their property rights in a property purchased only in the name of one of them and register half of the rights in the name of the other spouse, during the possession of the property (as opposed to arranging rights at the time of sale), this action will be considered a tax event. Sells to the other spouse half of the rights.

This means that both the sale on the one hand and the purchase on the other hand will be subject to praise tax and purchase tax payments, even though in practice no praise has grown from the sale to the family unit.

Substantially, the property was previously jointly owned by both spouses and remains their property even after the transfer of rights.

All that has changed is the proprietary right, the actual registration.

This effectively creates a situation where the family unit will be charged with tax payments and reports for real estate taxation.

It would be right to end this article with a well-known and important sentence: the end of an act in thought first!

The author, attorney and accountant Chaya Avisror Shimoni, owns a law firm that specializes in real estate taxation.

Produced by the Department of Special Supplements

Source: israelhayom

All news articles on 2021-04-08

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