Following the recent real estate tax reform and facing soaring property prices, more and more parents are asking themselves about transferring part of their real estate assets to their children. Indeed, giving a house or apartment to one's children allows for anticipating one's succession with tax advantages, but one must choose the legal mechanism most suited to your objective. What are the possible solutions within the tax framework? What are the advantages, risks and potential obstacles? Tax motivations should not overshadow the long-term implications.
Acquisition and gift to a minor child
1
The status of the parents in Israel, Israeli citizens or foreign residents;
The property purchased, single real estate property or additional real estate property.
Example: Mr. and Mrs. Lévy are Israeli citizens, they wish to acquire a third apartment for an amount of 3 million shekels. For tax reasons, they wish to register the property in their minor child's name. They will be taxed according to their tax household and will then have to pay (in the minor's name) an acquisition tax of 240,000 shekels (8% of the property value since it is an additional apartment), even though it is their child's first apartment.
2
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Example: Suppose Mr. and Mrs. Lévy hold several real estate properties and wish to give one of their apartments worth 3 million shekels to their minor child, they will then have to pay an acquisition tax of 80,000 shekels (1/3 of the sum of 240,000 shekels).
Attention!This case applies to both Israeli residents and foreign residents owning more than one real estate property in Israel.
In the case where Mr. and Mrs. Lévy, Israeli citizens, hold a single real estate property worth
3 million shekels and wish to give it to their minor child, they will have to pay an acquisition tax of 21,841 shekels (1/3 of the sum of
55,100 shekels).
Management of the minor child's assets
Thus, parents cannot dispose of the minor's assets (movable or immovable) or purchase real estate with their assets... without court authorization.
Calculation of acquisition tax
Are they foreign or Israeli residents?
Is this their first apartment in Israel?
The adult child who receives money from their parents, dedicated to purchasing an apartment
Attention! Owning real estate property or even part of it excludes rights to mortgage assistance granted by the State for young couples.
Check with your banker!
You have received real estate property as part of a gift and wish to sell it
Seek advice!
This article does not constitute legal consultation as such. For more information, our firm is at your disposal.
Maitre ABIKZER NATHALIE
