The tax relief published by the Tax Authority includes an option for parents of a minor to purchase an apartment in their name with a reduced purchase tax, provided the disabled minor uses the apartment. Previously, the apartment had to be registered in the minor’s name. This relief is also available to individuals with disabilities when purchasing an apartment without proving it is used as a residence.
By Dror Nir Castel, Nadlan Center
This week, the Tax Authority issued a facilitative directive on several topics related to reduced purchase tax for a disabled person, a blind person, or a family member. The main change is that parents of a disabled minor can now purchase an apartment in their name with reduced purchase tax, as long as the apartment serves the disabled minor, instead of having to register the apartment in the minor’s name as required until now. This relief is subject to court approval and also applies to families of legally incapacitated individuals (those needing a guardian) who are not minors.
The reduced purchase tax for a disabled person is 0.5% on a single apartment worth over 2.5 million shekels. For apartments priced below 2.5 million shekels, no tax will be charged on amounts up to 1,978,745 shekels, and 0.5% tax will be applied to the portion exceeding this amount.
According to the directive, the eligible population also includes those who purchased their apartment after retirement age but were recognized as having a disability of 75% before retirement. Additionally, it applies to people with functional disabilities that prevent them from returning to work and extends to both common-law spouses and to the widow of a soldier who died, even if she remarried, as well as to their orphans up to the age of 50. There is no age limit for orphans of both parents.
Furthermore, relief will be given to the disabled immediately upon purchasing a residence (as opposed to land), unlike the current situation, where the disabled person must prove that the apartment is being used as a residence. However, if it is found that the apartment is not being used as a residence, the assessment will be adjusted.
Attorney Eitan Raklin from the Meir Mizrahi & A. Rafael Law Office said, “The Tax Authority should be commended for publishing this facilitative directive, which addresses several important topics regarding the reduced purchase tax for disabled individuals purchasing homes for their residence. This includes relief for parents of a disabled minor who will now be eligible for reduced purchase tax, even if they buy the apartment in their name and not in the child’s name. It also extends the relief to parents who buy a home for an adult legally incapacitated child.”
Attorney Eitan Raklin (Courtesy of Meir Mizrahi Law Office) continued, “Additionally, the benefit of reduced purchase tax is now available not only to a spouse of a disabled person but also to the disabled person’s common-law partner. The directive also introduces a new approach regarding the purchase of tax relief and the process of contacting the tax authorities when requesting relief. For example, the Israel Tax Authority has adopted a more positive and different approach to cases where disabled individuals purchase apartments for their residence but have not yet taken possession. Previously, the Tax Authority would issue a full tax assessment and freeze the tax difference until proof was provided that the apartment was being used as a residence. However, the Tax Authority has now changed this approach. As a default, it will grant tax relief based on the disabled individual’s request, only adjusting the assessment if it is determined that the individual has not used the apartment as a residence. The tax relief will also be extended to the family of a fallen soldier, even if the soldier’s widow remarried after his death, as well as to their orphans up to age 50.”
