Can I buy an apartment in Israel in trust for someone else?

Israeli land tax law looks at the substance of a transaction rather than the name on the title. Section 69 provides that a transfer of a right in real estate from a trustee to the beneficiary is not a sale for tax purposes, so the tax event happens once, when the trustee acquires the property on the beneficiary's behalf. The Tax Authority applies the section narrowly. The beneficiary must be identified at the moment of purchase, the purchase money must be traceable to the beneficiary, and the trustee must hold nothing beyond bare legal title. Where the beneficiary was chosen only later, the arrangement is assessed as two separate taxable sales.

Foreign buyers use this route when the intended owner is a minor, a person who cannot travel, or a company still being incorporated. Two traps account for most of the damage. First, the purchase tax rate follows the beneficiary's status rather than the trustee's, so an Israeli-resident trustee does not import the resident rate for a non-resident beneficiary, and the non-resident purchase tax scale still applies. Second, registered title carries risk: the trustee's own creditors can attach the property, and lenders resist mortgages over undisclosed trusts. Register a he'arat azhara (caveat) in the beneficiary's favor and keep every payment routed from the beneficiary's own account.

From the full guide: Real Estate Purchase Tax in Israel (Mas Rechisha): A Complete Guide for Foreign Buyers and Non-Residents

← Browse all Q&A