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How do I object to an Israeli purchase tax or betterment tax assessment?

File a written objection with the Director of Real Estate Taxation within 30 days of the day the assessment notice was delivered to you, under Section 87 of the Real Estate Taxation (Betterment and Purchase) Law 5723-1963. The objection must set out your grounds and the tax you accept. The Director must decide within eight months of receiving it, or within 30 days after you supplied all requested documents if that is later, and may extend this to one year; an objection not decided in time is treated as accepted. If the decision goes against you, Section 88 gives you 30 days to appeal to an Appeals Committee chaired by a judge. This is a separate track from an income tax objection, with its own forms, offices and deadlines.

Israeli property taxes run on self-assessment. The buyer or seller files a declaration after signing, states the figures, and the Real Estate Taxation Office either accepts them or issues its own assessment. Disagreements usually turn on valuation rather than law: the office decides the declared price is below market, disallows claimed improvement expenses, or refuses an exemption. The objection is the only place to argue those points properly, because it is where you file appraisals, invoices and contracts. Arriving at the Appeals Committee with evidence never put to the Director weakens a case considerably.

The cash-flow trap catches non-residents hardest. Under Section 91(a), once an assessment is delivered the balance of tax is due within 15 days; if you object, you must still pay the amount not in dispute within 30 days, and the rest becomes payable within 15 days after the decision on the objection (Section 91(b)). Meanwhile the Land Registry will not register the transfer until the Tax Authority issues its certificate, so a foreign seller who disputes a betterment tax assessment can find a completed sale stuck in limbo. In practice the undisputed portion is paid and the balance is often secured, for example with a bank guarantee, so the certificate can be released while the objection proceeds. The 30-day clock runs from the day the notice was delivered, and the Director may extend it only where you show you were prevented from filing in time, for example by absence abroad or illness (Section 87(a)), so appoint an Israeli representative to receive correspondence.

⚖ In Practice
  • Governing law: Sections 87 to 91, Real Estate Taxation (Betterment and Purchase) Law 5723-1963
  • Competent authority: the Director of Real Estate Taxation at the regional office (Misuy Mekarke'in), Israel Tax Authority, for the objection; then an Appeals Committee under Sections 88 and 89, whose three members are appointed by the Minister of Justice and chaired by a judge
  • Deadlines: objection within 30 days of delivery of the assessment notice (Section 87(a)); appeal to the Appeals Committee within 30 days of delivery of the decision (Section 88); a further appeal to the Supreme Court on a question of law within 45 days (Section 90)
  • Statutory decision window: eight months from receipt of the objection, or 30 days after all requested documents were supplied if later, extendable to one year; otherwise the objection is treated as accepted (Section 87(d) and (f))
  • Payment: the undisputed tax is due within 30 days of the assessment notice, and the rest within 15 days of the decision on the objection (Section 91(a) and (b))
  • Not the same track: income tax assessments are challenged under Section 150 of the Income Tax Ordinance 5721-1961, before a different officer and a different appellate forum

From the full guide: Betterment Tax on Israeli Real Estate

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Get a Free Consultation with Adv. Eli ShimonyPrepared under the direction of Adv. Eli Shimony, Eli Shimony Law Office · Editorial policy

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