Obtain a land registration extract from the Land Registry Office
Agency: Land Registry office
The buyer obtains a land registration extract relating to the property from the regional land registry office. The buyer can verify that the property is registered in the name of the seller and that no other rights of any kind of third parties are registered.
It is possible to retrieve an extract online (costing approximately NIS 15). The extract is electronically signed and constitutes a binding legal document in every respect.
Time and cost: Less than one day (online), ILS 15
Check the Municipality record relating to the property
Agency: Municipality
The Municipality records show the right to build on the land of the property, and can indicate whether the building was constructed according to the applicable building permits, whether there are any legal proceedings relating to the construction and use of the building.
Time and cost: Less than one day (online), no charge
File a report on the transaction with the Municipality and obtain tax clearance from the Municipality
Agency: Tax Department of the Municipality
The Municipal certificate for transfer of title confirms that all the municipal taxes relating to the use of the property were paid and that there is no Municipality Appreciation Levy liability or that such liability was discharged.
The Municipality Appreciation Levy (Hetel Hashbacha) is paid on the appreciation in the value of the property due to change of the permitted use of the property (“the Appreciation”).
Hetel Hashbacha is imposed
- When a city building plan is approved;
- When the city provides relief construction rights;
- In case of resulting from the resolution of the original zoning conforming use of the property.
Hetel Hashbacha shall be paid to the municipality only if there has been a change of zoning for a neighbourhood which causes the value of the property to rise.
The assumptions in this case study do not indicate that such a change was made, so there is no Municipality Appreciation Levy liability. The rate of the Municipal Appreciation Levy payable is 50% of the Appreciation.
Time and cost: 25 days, ILS 111.9
File a report on the transaction with the tax authority and obtain tax clearance
Agency: Tax Authority
After the sale agreement has been prepared and signed by the parties, they have 30 days to file a report on the transaction based on self-assessment with the tax authorities. It should include all details of the transaction including the tax amount and calculation. Usually the self-assessment is prepared by the company’s lawyers and accountants and the report on the transaction is filed by the lawyer that handles the transaction.
After filing a report on the transaction with the tax authority, a voucher will be sent by the tax authority.
The following taxes, based on self-assessments, must be paid:
- Capital Gains Tax (Mas Shevach) – paid by the seller on the difference between the purchase price and the original purchase price paid by the buyer in the current transaction. According to the Amendment No. 70 to the Land Taxation (Capital Gain and Purchase) Act 2011, starting on March 31, 2011 the purchaser makes an advance payment on account of CGT at the rate 7.5%-15% of the value of the transaction (the full amount of CGT is set off against the consideration of property and is regarded as if it was paid to the seller). The tax is up to 25 % for companies (Land Betterment Tax);
- Purchase Tax (Mas Rechisha)- paid by the purchaser is a flat rate of 6% for a commercial property. Purchase tax is paid within 60 days after filing the self-assessment report;
- Betterment Tax (Hetel Hashbacha) – only if there has been a change of zoning for a neighborhood which causes the value of the property to rise.
Time and cost: 21 days, ILS 448,381.15; (6% of property tax)
Lawyer drafts the sale purchase agreement
Agency: Lawyer
The contract agreement is prepared by the parties’ lawyers. Lawyer fees for a commercial warehouse will be in the range of 1.0-2.0% of property value.
A sale deed is also prepared and signed by the parties.
Time and cost: 4 days, ILS 85,939.72 (0.8%-1.5% of property value)
Apply for registration at the regional Land Registry Office
Agency: Land Registry office
When all the certificates are obtained, the sale deed is signed by both parties.
When the registration is made in the Land Registry, the signature of the parties on the deeds and other certain details relating thereto are required to be authenticated by a lawyer or the Land Registrar, after the nature of the transaction and the consequences thereof were explained to the parties and it was clear that the parties willingly signed it.
The transaction is subject to a 17% VAT, paid on the 15th day of the month following the date of receipt of payment
The documentation shall include:
- Transfer deed
- Tax Authority certificates confirming tax payments (obtained in Procedure 4)
- Municipal clearance certificate (obtained in Procedure 3)
- Certificate of incorporation of the parties
- Minutes of the companies’ board of directors with resolution to execute the transaction. (If a power of attorney was executed by the company and authorized by a notary that the subscriber is empowered to execute on behalf of the company- there is no need to attach the minutes).
- Counsel’s or accountant’s certificate regarding both companies including the following details: existence of the company; the company is authorized to execute the transaction according to its articles of association; and the participants at the board of directors meeting as detailed in the above mentioned minutes are the directors of the company and empowered to act on behalf of the company and to sign the deed of transaction.
Time and cost: 7 days, ILS 38
