Gift Apartment in isreal
Receiving an Apartment as a Gift in Israel Legal Structure and Key Considerations
Receiving an apartment as a gift in Israel is a significant legal transaction that requires careful handling to ensure that ownership is transferred correctly and that both parties are protected. Although no money is exchanged, the law still treats a gifted property as a real estate transfer that must comply with registration rules, tax regulations, and formal documentation requirements. A written deed of gift, proof of ownership, and proper coordination with the Israel Tax Authority and the Land Registry are essential to complete the process lawfully.
A gifted apartment often involves family members, which makes it even more important to verify that the transfer is voluntary, documented correctly, and free of future disputes. If the process is not handled properly, beneficiaries may face complications such as unclear ownership rights, tax liabilities, or difficulties registering the property in their name. Professional legal guidance ensures that the transfer is clean structured and compliant with the Real Estate Taxation Law and the Land Registry requirements.
Why Are a Written Agreement and Affidavits Required?
Despite the fact that the transfer is made as a gift, there is a legal obligation to establish the donor’s clear intent and to demonstrate that no monetary or other consideration was given.
Without a well-drafted agreement and duly executed affidavits, several legal problems may arise:
1. Lack of Proof Before the Tax Authority
The Tax Authority examines whether the transaction is truly a gift or a disguised sale.
A gift agreement together with affidavits constitutes the primary evidentiary basis proving that the transfer was made without any consideration.
2. Potential Future Claims Within the Family
In the absence of a written agreement, other family members may later assert that a different intention existed, that hidden consideration was involved, or that the gift was improperly granted.
3. Difficulties in Registering the Rights
The Land Registry (Tabu) and the Israel Land Authority require clear, authenticated documents.
A missing agreement or affidavit may significantly delay registration sometimes for many months.
4. Protection Against Withdrawal of the Gift
A properly drafted agreement narrows the grounds for a unilateral retraction by the donor and provides the beneficiary with enhanced legal certainty.
Who is considered a ‘relative’ under the Real Estate Taxation Law?
For the purpose of transferring an apartment by way of gift and benefiting from the statutory exemptions, a “relative” is broadly defined and includes:
- Husband or Wife
- Parent
- Grandparent
- Brother or Sister
- Grandson or Granddaughter
Why is an appraisal so important?
A preliminary appraisal is a professional valuation of the apartment conducted before submitting the transaction to the Real Estate Taxation Authority, and it serves as a central protective tool in gift transactions or intra-family sales. Since the Tax Authority is entitled to examine the declared value and even issue an “assessment to the best of its judgment” if it finds that the reported value does not reflect market value, a preliminary appraisal provides an official, reasoned, and professional opinion based on market data, comparable transactions, planning schemes, and the condition of the property. This significantly reduces the risk that the Authority will unilaterally increase the value, require an amended assessment, or impose unnecessary taxes, and it enables the transaction to proceed efficiently and with certainty.
The distinction between Section 62 of the Real Estate Taxation Law and Regulation 20 – the definition of “relative”
Section 62 of the Real Estate Taxation Law grants exemptions for gift transactions and therefore defines “relative” in a very broad manner (including parents, children, siblings, grandparents, grandchildren, and their spouses), with the purpose of facilitating transfers without consideration within the family. In contrast, Regulation 20 of the Real Estate Taxation Regulations deals with determining the value of a transaction for purchase tax and valuation purposes, and therefore adopts a much narrower definition of “relative” (primarily a parent, child, and spouse). The practical consequence is that a transaction may qualify as “between relatives” under Section 62 and enjoy an exemption, yet still not be considered a “relative transaction” for the purposes of Regulation 20 allowing the Tax Authority to examine the property’s value and issue an independent assessment.
Capital Gains Tax and Purchase Tax in the Transfer of an Apartment by Way of Gift – What Should You Know?
In a gift transaction between relatives, the donor is exempt from Capital Gains Tax (Mas Shevach) under Section 62 of the Real Estate Taxation Law, provided that the transfer is made without consideration and between relatives as defined by statute. By contrast, the recipient is liable for Purchase Tax (Mas Rechisha), albeit at a reduced rate one-third of the tax that would have been payable had the apartment been acquired in a regular purchase transaction. It is important to emphasize that the exemption from Capital Gains Tax applies solely to the transferring party, whereas the recipient is not exempt from Purchase Tax. The Tax Authority is further entitled to review the declared value of the property and may issue an assessment “to the best of its judgment” if it determines that the reported value does not reflect market value. Accordingly, obtaining a preliminary appraisal is strongly recommended in order to avoid disputes or unnecessary tax exposure.
A gift transaction involving real estate may appear simple, yet from both a legal and tax perspective it is one of the most sensitive and complex transactions: the donor benefits from an exemption from Capital Gains Tax, the recipient pays one-third of the applicable Purchase Tax, the parties must establish clear intent, the familial relationship must be proven in accordance with the law and regulations, and the declared value must be aligned with market value to avoid a corrective assessment by the Tax Authority. This is precisely why such a transaction must be handled exclusively with the assistance of our office, the Law Offices of Adv. Yohan Sisse, which represents dozens of clients each year in gift transfers and possesses deep expertise in the statutory framework, exemptions, planning requirements, administrative procedures, and the practical conduct before the Tax Authority and the Land Registry. Our guidance ensures accurate reporting, properly drafted documentation, and clean, secure registration of your rights with no surprises.
