What is the Israeli improvement levy (heitel hashbacha) and when is it due?

Part E/3 of the Planning and Building Law 5725-1965, specifically Sections 196A to 196C, establishes the heitel hashbacha — a levy collected by the local planning committee when a planning decision directly increases the value of a specific property. Common triggers include rezoning a plot from agricultural to residential use, approval of a new outline plan adding floor area, or a variance granting additional building rights. A professional appraiser appointed by the local committee calculates the value uplift attributable to the planning benefit. The owner can contest this valuation before the local planning committee within 45 days of receiving the assessment notice, and may appeal further to the District Planning and Building Committee. The heitel hashbacha is distinct from the capital-gains betterment tax (*mas shevah*) — both can apply to the same transaction.

For foreign property owners, the heitel hashbacha most often surfaces unexpectedly at the point of sale. A planning decision granting building rights years earlier may have generated a levy that was never paid because no building permit was sought at the time. Under Section 196A(4), the levy becomes payable on the earlier of issuing a building permit or completing a property sale — and payment is a prerequisite for registering the transfer in the Land Registry. Buyers' attorneys routinely request a certificate from the local authority confirming no outstanding heitel hashbacha as part of property due diligence. Foreign sellers should commission this check early — assessment disputes can delay a sale by months.

From the full guide: Betterment Tax on Israeli Real Estate: A Complete Guide

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