Living abroad? Interested in purchasing a property in Israel?
Check your eligibility for tax exemption when purchasing land in the holy land!
Very often people are mistaken in assuming that the mere fact of being an Israeli citizen makes you eligible for tax exemption or reduced tax rates (designed for Israeli residents), even though you are living abroad temporarily.
This is a wrong presumption. The crucial recognition of residency for tax purposes depends upon an objective determination of whether your actual place of life is in Israel through a subjective test as to your true intention regarding the center of your life at the relevant time period prior to the transaction.
Several factors will be examined by the Israeli Tax Authority to establish whether Israel is your center of life at the relevant time period.
Those factors designed to examine your ‘ties and connections’ to Israel at the relevant time including, inter alia, your permanent home, you and your family’s actual place of residence, your permanent working place, other owned property at Israel and other factors which might be relevant to establish true ties to Israel. According to the Israeli Tax Authority, there is a rebuttable presumption that living in Israel for at least 183 days in the tax year of the transaction or fourteen months in the tax year and its two previous years, render Israel as your center of life.
Certain group of people may be considered Israeli residents even though they do not meet the criteria for center of life, mainly in cases of civil servant or employment in Israeli governmental agencies or representations.
Thus, living abroad may temporarily might harm your entitlement for tax exemption during that period. In such a scenario, a postponed transaction might be preferred. You had better consider your tax exposure well in advance, as soon as considering land purchase in order to get prudent decision. Do not hesitate to contact us for any details and pre evaluation of your potential tax exposure.
