Gifting Family Members Israel Residential Property

An Israeli real estate gift is called Heskem matana or matana. As the concept implies, Israel’s law regards the transfer of real estate to someone else for free as a gift. As per the law in Israel, the gift agreement would complete when the donor transfers the property to that other party. In some cases, it is possible to gift a relative your Israeli real estate property as opposed to leaving it as an inheritance. In that case, you should keep some things in mind, including the following.

Are you a tax resident of Israel? If you are not, know that the transaction of a lifetime residential real estate in Israel can be taxed, albeit it is as a gift without consideration. A residence as a parent’s gift to their child, or vice versa, or such a transaction between spouses, may be taxable if the parties reside outside Israel.

The one who makes the residential gift may be exempt from tax in the event its recipient comes under the Israel Tax Authority’s close relative definition. However, the government organization would tax the gift recipient on the item’s market value at about 33% of its purchase tax. That means the party would pay the amount if they are buying the Israeli residential property from the nation’s open market.

Conversely, the organization may exclude the gift recipient from having to pay the tax in the event of meeting the following conditions.

  • If they are a tax resident of Israel with no other residential real estate property in this nation
  • If the property value does not go beyond 1.696 million Israeli shekels

If it goes beyond the above-mentioned limit, then their tax payable would be adjusted according to the amount exceeding 1.696 million Israeli new shekels.

Both parties in the transaction should sign written statements confirming the property transaction as a gift without consideration. As with any other property transaction in the nation, certification from Israel’s tax authority would be required for this transaction to be registered with the Israel Land Registry. You can find more information here about real estate transactions in Israel.

A lifetime transfer may be taxable here, but Israel does not have estate or inheritance tax. That makes property transfers in the event of death to be non-taxable. Nevertheless, generally, residential property gifts between members of families are taxable in the nation.

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