Purchase Tax Discount on Residential Property for Children with 100% Disability (Right)

From All Rights (Kol-Zchut) (www.kolzchut.org.il)

הקדמה:

Parents of a child who is entitled to a full (100%) Disabled Child Benefit are entitled to a purchase tax discount when buying a property in which the child will live
In addition to the benefit, the child's permanent medical disability must be established as 100% by the National Insurance Institute
Parents eligible for the benefit will pay tax of only 0.5% of the value of the purchase
The right is limited to two purchases (the discount may only ever be used twice)
  • According to the Lands Taxation Regulations (Appreciation, Sale, and Purchase) (Purchase Tax), you may receive a tax discount when purchasing a residence for a child with disability established as 100%.
  • Those entitled to the discount will be required to pay a fixed tax rate of only 0.5% of the purchase, instead of progressive tax rates according to the current law.
  • The right may only ever be exercised twice.

Who is eligible?

  • Parents of a child receiving a full (100%) Disabled Child Benefit.
  • In addition to the disabled child benefit, the child's permanent medical disability must be established as 100% by a National Insurance Institute committee. Disability is established as part of the rights claim process.
  • Conditions for eligibility: The property must be used as the child's residence.

How to claim it?

Lands Taxes - Central Bureau
Kanfei Nesharim 5
PO Box 1170, Jerusalem 91010
Fax: 02-6559404
  • It is recommended to contact the hotline with requests and clarifications related to lands taxation: 02-6559262 or 1-800-222-337.
  • After submitting the request, the family will be referred to a National Insurance Institute medical committee to determine the degree of the child's medical disability.
  • The process will only move forward if the committee establishes 100% permanent medical disability for the child.
  • Following the medical committee decision, the family will be directed to Family Court to confirm eligibility for the exemption.
  • The parents must go to court as the minor's legal guardians with a request for declaratory relief in order to receive the authorization to make use of the benefit to which they are entitled.
  • The Guardian General will respond to the request with the minor’s best interest in mind.
  • The discount will be given after obtaining a judgment approving the application.

Residence registered under the child's name

  • If parents want to transfer the rights to the residence from the child to another person in the future, approval from Family Court will be required.
  • When the child reaches the age of 18, as long as he/she has no appointed guardian, the child may do as he/she pleases with the property.
  • In accordance with the Ministry of Construction's “Unavailability” (ee-zminut) procedure, the child will not lose his/her rights related to acquiring a residence in the future, but only if the home purchased in the child’s name is the only home owned by the parents, and they live there.
  • It would be enough that parents inherit a small part of another residence to disqualify the child from entitlement to benefits granted by the Ministry of Construction for people with disabilities (such as obtaining a mortgage on special terms or rental assistance). Also, it is not known if or for how long the "Unavailability" (ee-zminut) procedure will remain in force.

Receiving a retroactive discount

  • Parents who have already paid a purchase tax, who meet the criteria regarding real estate tax laws, and who receive the proper approvals from the National Insurance Institute and the Court, as detailed above, may request exemption for up to 4 years retroactively.

Please note

  • A purchase tax refund may only ever be received twice, and therefore, if the parents make use of the child's right, he/she would have only one opportunity to use the discount in the future.
  • There is no need to register the residence under the child's name.
  • The question of whether or not it is worthwhile to utilize the purchase tax discount depends on the value of the acquired property. There is a balance point where the value of the property acquired by the disabled person does not justify a "waste" of the discount, or may simply not be economically worthwhile.
Example:
The tax rate on a single residence valued up to 1.35 million NIS is 0% as of 21.02.2011, meaning that if the apartment costs a bit more, it is not worthwhile to use the child's discount, as it does not lead to significant savings.

Court Rulings

Government agencies

Laws & Regulations

Additional publications

Sources

endarticle