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 reduced purchase tax of 0.5% of the value of the property, when purchasing a home in which the child will live
In addition to the benefit, the child's permanent medical disability should be established as 100% by National Insurance Institute Medical Committee
When purchasing a single residence, valued up to NIS 2,500,000 (as of 2017), there is a tax exemption on the first payment bracket.
For more information, see Regulation 11 of the Property Tax Regulations (Improvement and Acquisitions) (Purchase Tax)

Parents of a child who is entitled to a full (100%) Disabled Child Benefit are entitled to a reduced purchase tax in accordance with the conditions detailed below.

  • In addition to the benefit, the child's permanent medical disability should be established as 100% by National Insurance Institute Medical Committee
  • Those who buy a piece of land to build on, are eligible to pay a reduced income tax of 0.5% on the part of the land that the house they will live in will be built on (regular income tax is paid on the rest of the property) and on the condition that the house is built within 2 years.

Benefit Rate

Benefit Rate in Purchase of a Single Home worth up to NIS 2,500,000

  • For the purchase of a single home worth up to NIS 2,500,000 made from 6.12.2016 and onward (see the definition below), there is a tax exemption on the first payment bracket:
  • On the part worth up to NIS 1,623,320, one will not pay purchase tax from 16.01.2017 until 15.01.2018 (up to NIS 1,600,175) in previous years.
  • On the remaining amount of the worth of the house (up to NIS 2,500,000), one must pay 0.5% of the value of that part.

Benefit Rates in the Remainder of Cases

  • When purchasing a home that is not defined as a single home, or is a single home worth over NIS 2,500,000, and for a purchase of a single home worth less than NIS 2,500,000 that was made before 6.12.2016, the benefit is to pay a reduced purchase tax of 0.5% on the value of the home.

Definition of a Single Home

  • A single home is defined as the only home of an Israel resident, including someone who became an Israeli resident or a returning resident within two years of purchasing the home.
  • The buyer of the home, his/her spouse that lives with him/her and his/her children (unmarried) up to age 18, are considered a single buyer for this purpose.
  • The home is considered a single home even if the buyer owns another home that was rented to people through a protected rental before 01.01.1997 or an additional home that the buyer owns less than a third off, and if it was a home that was inherited the buyer can own up to a half.

Home Improvements

  • If the purchases owns an additional home to the one he/she is currently buying, and sells the previous months within 18 months of purchasing the new home, or within a year of receiving the new home if it was bought from a contractor - than he/she is considered the owner of a single home in the context of tax calculations (when the additional apartment is sold it must be reported right away to the local offices).
  • The tax amounts for a single home will be used also in the purchase of an "alternate home" if the purchaser meets all of the following conditions:
    • He/she has 2 apartments simultaneously in his/her possession and he/she sold one of them with a tax exemption.
    • Within 12 months of selling the first home he/she sold the second home with a tax exemption in accordance with section 49 of the Property Tax Law (Purchase and Appreciation).
    • The combined value of both of the homes does not exceed NIS 1,998,000 (right as of 01.01.2017-31.12.2017).
    • In the year before or after the sale of the second home, he/she purchased a third home ("alternate home") for a cost of at least 3/4 of the combined value of the 2 previous homes.


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. (See details in the "How to claim it" section.)

How to claim it?

Lands Taxes - Central Bureau
Kanfei Nesharim 5
PO Box 1170, Jerusalem 91010
Fax: 02-6559404
  • The Help centers, services and resources of the tax authority can be consulted for assistance.
  • After submitting the request, the family will be referred to a National Insurance Institute medical committee to determine the degree of the child has 100% permanent medical disability. For more information see the Purchase Tax Discount Medical Committee.
  • If the medical establishes that the child has 100% permanent medical disability, 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, and meet the criteria regarding real estate tax laws, and 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 be received twice in a person's lifetime, 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.

Court Rulings

Aid organizations

Government agencies

Laws & Regulations

Additional publications

Credits

endarticle