Financial relations and real estate taxation agreements - the way to get an exemption from praise tax and purchase tax

The Real Estate Tax Law stipulates that anyone who owns more than one apartment and is interested in selling it is liable to praise tax.

Adv. Etty Peretz Keinan, who deals with family and real estate law with an emphasis on tax planning with the help of financial agreements, expands on precedents that led to the exemption from praise tax and purchase even when the economy owned two apartments.

Hila Tzur-Shinzi, in collaboration with Zap Legal

11/05/2022

Wednesday, May 11, 2022, 2:50 p.m.

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"The tax authority states that if one household owns two houses, ie when one property is owned by the woman and another property is owned by the man, then if the family unit sells one of the apartments he will have to pay praise tax," explains lawyer Etty Peretz Keinan, who heads the firm. Which deals with family and real estate law, with an emphasis on tax planning with the help of financial agreements.

"However," she says, "the Supreme Court has set two cumulative conditions that may contradict the holding: the first - the existence of a prenuptial agreement signed and approved by the court and the second - actual property separation that includes separate bank accounts, both in day-to-day management and mortgage payments. The two properties, as long as there is a mortgage on the property. "

Adv. Peretz Keinan expands on cases and precedents in the law that led to an exemption from praise tax and even an exemption from purchase tax even when the household owned two apartments

old situation, the court rules that half of the joint property is subject to purchase tax because one of the parties has an additional apartment, but in the new situation when the couple has a financial agreement approved by the court, the joint apartment will be considered a single family cell apartment and can be "

Adv. Peretz Keinan further states in this matter:" The Tax Authority has set auxiliary tests and implementation instructions 5/2014 to deny the separation of property and it is examining these issues regarding the separation of the partnership. "

"The Rappaport judgment given in the district court held that tax relief can be obtained even when the spouses come with assets and rights in assets from a previous marriage. In this case it was a second marriage between divorced spouses, with the wife owning two apartments purchased before marriage, "There was a sum of money equal to half the value of the residential apartment that was jointly owned by him and his ex-wife."

Adv. Peretz Keinan explains that even before the marriage the parties signed a financial agreement which stipulated that there would be complete separation of property between the assets and the rights and indeed the parties lived together in one of the woman's apartments and after several years the man bought another apartment in exchange for selling his share of the apartment.

She said, "In this issue, the separation of the new property from the family property situation was examined, and indeed it was proven that the man rented the apartment he purchased to a third party, while the rent money was used for his current payments in the apartment where he lived with his second wife. Wins tax brackets for a single apartment. "

Does the ruling also apply to publicly known spouses?

"A prenuptial agreement applies only to married couples and the court approves it under the prenuptial law law. "The cohabitation agreement will have the force of a judgment and it will be possible to approve it in court and hence open up options for proper tax planning."

"Certainly, married couples are allowed to sign a prenuptial agreement even after their marriage, with this agreement separating the assets that each spouse purchased before the marriage. "Signed and approved by the court. One of the spouses was interested in selling his apartment, but in this normal situation, without a financial agreement, the spouses were liable to praise tax on the sale of the apartment."

"We examined their economic conduct and it appeared that the actual parties were engaged in property separation when each of them paid independently from his private and exclusive account the mortgage for his property purchased before the marriage. Therefore, the parties were offered to sign a prenuptial agreement. The sale of the apartment is exempt from praise tax. "

Adv. Peretz Keinan emphasizes that it is important to draft a financial agreement, since the purchase of an apartment after the sale in a normal situation will be subject to purchase tax, while the drafting of the financial agreement will allow the residential apartment to be kept in place of any other property that replaces it. The same spouse who sold the apartment was allowed to purchase another apartment even while he was married and receive an exemption from purchase tax, because he

restored the situation to its former state, according to which he owns a single apartment that was kept in separate property under a prenuptial agreement.

In such cases, spouses can save hundreds of thousands of shekels that would have been paid to the tax authorities following the sale and purchase. "

For this reason, Adv. "And so there are many people who come to marriage with assets. Proper tax planning," she concludes, "

For more details and to contact us, leave details here or by phone: 04-9077011 To

Adv. Etty Peretz Keinan on the Legal website

Article courtesy of Zap Legal

• Sentence

• family law

Tags

• Appreciation Tax

• purchase tax

• Financial agreement