Q&A: When can I get a praise tax exemption?

From housing improvers to real estate inheritance: what is a praise tax, when are you required to pay it and under what circumstances can you enjoy an exemption or pass it on to children?

In conjunction with Legal Zap

21/06/2022

Tuesday, 21 June 2022, 13:12 Updated: 17:58

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The law allows for an exemption from praise tax in various ways, and anyone considering a significant real estate transaction should be aware of this (Photo: ShutterStock)

"Anyone who sells an apartment, shop or other right in real estate is required to pay praise tax, unless he deserves an exemption on the sale," says Adv. Itiel Hikri, a real estate expert who has accompanied dozens of transactions in the field to date.

"The exemption has a lot of meaning and it could end up being what songs or will bring down the deal."

According to a dear attorney, the law allows for an exemption from praise tax in various ways, and anyone considering making a significant real estate transaction should be aware of this.

"You must start with a lawyer who specializes in real estate and knows the subject of goodwill tax in depth, otherwise you may get involved and make bad decisions."

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In other words, a certain percentage is deducted from the difference between the sale price of the property and its value when it is purchased. "

Dear Attorney explains that there are expenses that can be deducted from this gap, such as brokerage fees, attorney's fees, payment to an appraiser and more, proven significant renovation, which significantly reduces the tax liability. To the seller, "he emphasizes." Whoever sells a real estate right at a loss is not liable to tax. "

"For this purpose, look at all the members of the nuclear family under the age of 18 together. If one of the family members sold an apartment in the past and took advantage of the exemption - the whole family will be seen as having done so."

"Absolutely yes. A praise tax exemption on a single residential apartment is the most common exemption and can be used every 18 months."

According to the dear attorney, in order to receive the exemption, various conditions must be met. Dear Advocate further clarifies that

the

exemption from praise tax on the sale of a single residential apartment is granted for an apartment worth up to NIS 4.6 million and that the relative portion above this ceiling will be taxed.

I own two apartments.

Can I still take advantage of the praise tax exemption on a single residential apartment?

"Absolutely yes, but for that you will have to make a tax plan. As part of this you will be able to transfer the cheapest apartment for children as a gift - a transfer that will be made exempt from praise tax, and then when selling the remaining and more expensive apartment enjoy a praise tax exemption as a single residence. Dear Advocate, "Because the transfer of the apartment as a gift to children must be real and not an artificial transaction intended solely to evade paying tax."

? On a single residential apartment, and the law recognizes a situation in which housing improvers hold two apartments at the same time for a certain period of time. "

According to him, housing improvers are allowed to sell their apartment free of praise tax and buy another apartment in its place or buy an improved apartment, own two apartments for a period of up to 24 months, and then sell the old apartment.

The exemption for a single residential apartment will be granted for the old apartment sold.

"A person who sells an apartment that he inherited does not have to pay praise tax on it. In order to receive the exemption, various conditions must be met, including showing that the seller is a descendant of the testator, his spouse or descendants' spouse, and that before the testator passed away he owned a residential apartment. Unit, and that if he was alive and sold his apartment, he would be entitled to an exemption. "

Dear Advocate explains that in the case of inheriting a single residential apartment, the heir enters in the seller's shoes and is entitled to an exemption - even if he (ie, the heir) has several apartments. I

do not apply to a foreign resident.

Dear lawyer: "For that you will have to economize your steps wisely. You must transfer one of the apartments as a gift to the children for free, so that when you die you will own a single residential apartment which you can later bequeath to them free of praise tax."

"As long as you have one apartment and you want to buy a more expensive apartment, you can give your current apartment as a gift to your children and enjoy the praise tax exemption, then buy the more expensive apartment as a single apartment and receive a reduced purchase tax. In the future you can sell the expensive apartment. The same as a single residential apartment for your children, so that they will enjoy an exemption from praise tax on the sale. "

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• Sentence

• Real estate and real estate

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• Appreciation Tax