Client updates / Real Estate

Israeli Minister of Finance Israel Katz’s plan to reduce purchase tax for investors has gone into effect. Until now, under plans advanced by the previous Minister of Finance, Moshe Kahlon, for lowering housing prices and pushing investors out of the real estate market, the purchase tax for investors went up from 5% to 8% for an apartment that was not the purchaser’s sole apartment.

Apartment owners experiencing difficulty selling their old apartments are entitled to a seven-month extension in which to sell, and the Israel Tax Authority will not count this period for tax purposes.

What happens if a contractor’s workers do not come to work due to the spread of the coronavirus, and therefore cause delays in the delivery ? Will the buyer be entitled to compensation or will the delay be justifiable?

A recent judgment by the Hadera Magistrate’s Court holds that modifications to an apartment made at a purchaser’s request do not constitute just cause for late delivery and that the purchaser must be compensated for any delay.

Israeli’s Ministry of Construction and Housing recently imposed a NIS 6.5 million financial sanction on the developer of a TAMA 38 project in Kiryat Bialik. The developer was fined after failing to produce a guarantee to purchasers of apartments in the project for funds they had paid toward the unit price, as required by the Assurance of Investments Law.

In a precedential ruling, the Tel Aviv District Appeals Committee affirmed the Regional Planning and Construction Committee’s decision that in cases in which a new zoning plan provides more rights than those set in the TAMA 38 provisions, the consent of all residents is required.

The National Committee for Planning and Construction has approved the Planning Administration’s initiative to amend the provisions of TAMA 35. The planned amendment will update the calculation method for the level of population density, from the number of residential units per square kilometer to the number of persons per square kilometer.

The Tel Aviv District Court handed down a decision a few days ago rejecting the Israel Tax Authority’s (ITA) position on the conveyance of real estate properties to trusts. This decision dramatically changes the taxation of trusts in Israel.

The Supreme Court recently heard a case on the cancellation of expropriation and ruled that public interest prevails over the damage caused to landowners.

A judgment by the Supreme Court recently established the scope of instructions the Land Supervisor is authorized to issue in regard to the common property of a condominium defined as a “complex building.”

The Tel Aviv District Committee for Planning and Construction recently gave final approval for the Tel Aviv 3^rd Quarter Plan, making possible the construction of 8,000 new residential units. The road to the plan’s final approval, a plan prepared in accordance with section 23 of TAMA 38, was long and filled with obstacles.

The National Committed decided, for the first time, to submit an urban renewal plan for the residential neighborhood of Kiryat Moshe in Rehovot.

The Tel Aviv District Appeals Committee recently set aside a building permit granted by the city of Tel Aviv to the owner of office space in a building designated for demolition under TAMA 38 who sought to convert the space to residential use.

The Appeals Committee for Planning and Building, Compensations and Betterment Tax in the District of Jerusalem held that family members who are not one economic unit are not a single family unit for the purposes of exemption from betterment tax in the expansion of an apartment of no more than 140 square meters.

The Knesset passed a new amendment (Amendment 9) to the Sales Law (Apartments), whereby developers who build apartments for sale are permitted not to deposit sureties for the VAT component of the transaction, thus decreasing the sum deposited by them.

The Tel Aviv District Court, presiding as an Administrative Court, rejected a petition filed against the District Appeals Committee for Planning and Construction and held that a structure that has not received a building permit cannot execute a TAMA 38 project. Per the court, the desire to reinforce buildings for risk of earthquakes is not intended to cure construction non-compliance and is not designed to “launder” buildings constructed without a permit

On July 24, 2017, the Sale Law Commissioner in the Israeli Ministry of Construction and Housing published two clarifications concerning the Sale Law and urban renewal projects.

In light of the complexity of urban renewal projects, and in order to promote further urban renewal, Israeli authorities have begun taking action to create mechanisms and implement changes to convince apartment owners and entrepreneurs that urban renewal projects are feasible and worthwhile.

On December 23, 2018, the Israeli ministerial committee approved a draft bill on the subject of real-estate purchasing groups. This draft bill is designed, on the one hand, to protect members of purchasing groups and, on the other hand, to enable their continued existence as a means to construct residential apartments while cutting costs.

The Law for Reducing the Use of Cash, which is scheduled to come into effect on January 1, 2019, will have a significant impact on the real-estate sector.