The Israeli tax office assessed more betterment tax than I declared on my apartment sale. Can I challenge it from abroad?

Real estate tax in Israel runs on its own appeal ladder, separate from the income tax objection procedure, and the deadlines are shorter than most sellers abroad assume. Under Section 87 of the Real Estate Taxation (Appreciation and Purchase) Law 5723-1963 you have 30 days from the day the assessment was delivered to file an objection with the Director. Miss it and the assessment stands, whatever its merits, unless you can persuade the Director to extend.

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Detailed Answer

The objection, the hasagah, is filed on Form 7013 with the real estate taxation office that issued the assessment, and it must set out the grounds. The usual grounds are factual rather than legal: acquisition cost the assessor did not accept, improvement expenditure without receipts, betterment levy or brokerage that should have been deducted, an incorrect apportionment between land and building, or a refused exemption. Section 87 also puts a clock on the Director. A decision must be given within eight months of the objection being filed, and if it is not, the objection is deemed to have been accepted, which is a real remedy and not a formality. If the decision is adverse, Section 88 gives 30 days from delivery of that decision to file an erur with the Appeal Committee, a tribunal chaired by a District Court judge sitting with members drawn from valuation and accounting. Between the two lies a separate route worth knowing about: Section 85 allows the Director to correct an assessment within four years where there was a new fact, a mistake or an incorrect return, and a Section 85 application is sometimes the better instrument where the problem is an arithmetic or documentary error rather than a disagreement about value.

For a seller who has already left the country the first practical problem is service. The 30 days run from delivery, and an assessment posted to an old Israeli address or to the lawyer who handled the sale may be delivered long before you hear about it, so the address held by the Israel Tax Authority should be corrected the moment you sell. The second is evidence. Israeli assessors want receipts, and improvement work paid in cash to a contractor two decades ago is exactly what gets disallowed, so bank statements, permits and old contracts are worth digging out before the objection rather than after. Everything can be filed by an Israeli lawyer or accountant under a notarised and apostilled power of attorney, and attendance at a hearing before the Appeal Committee is generally the only stage requiring your presence, commonly managed by video for a party overseas. Where the dispute is about income tax rather than the sale of the property itself, the timetable and forum are different, and our answer on objecting to an Israeli income tax assessment as a non-resident sets out that track.

In Practice: Section 87 of the Real Estate Taxation (Appreciation and Purchase) Law 5723-1963 requires the objection to be filed within 30 days of delivery, on Form 7013, at the Israel Tax Authority real estate taxation office; the Director must decide within eight months or the objection is deemed accepted. Section 88 allows an appeal to the Appeal Committee, chaired by a District Court judge, within 30 days of that decision, and Section 85 permits correction of an assessment within four years. On a Tel Aviv sale where the assessor disallowed NIS 250,000 of improvement costs, the tax at stake at a 25% rate is about NIS 62,500, and a contested erur typically runs 12 to 24 months.

When to Consult a Lawyer

• The assessment landed while you were abroad and the 30 days have already run. An extension application has to explain the delay and be accompanied by the substantive grounds, and it is far weaker filed a year late than a month late.
• Your dispute is about a refused exemption rather than about numbers. Exemption arguments go to the Appeal Committee on law, and the objection has to be pleaded from the outset in terms that survive to that stage.
• The assessor has revalued the property using comparables you have never seen. Obtaining the comparables and instructing an Israeli valuer takes weeks, and the eight-month clock on the Director is running while you do it.

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Speak With an Israeli Attorney

We file the Section 87 objection inside the 30 days, assemble the cost and improvement evidence that Israeli assessors actually accept, and take the matter to the Appeal Committee where the Director's decision does not stand up.

Contact us for a confidential initial consultation.