Selling a Property in Urban Renewal (TAMA 38 and Pinui Binui)

Fast facts: When you sell an apartment that is signed into a TAMA 38 or Pinui Binui project, you are not selling four walls in the normal way. You are selling your seat in the deal: your signed resident-developer agreement and your right to a future, rebuilt or reinforced apartment. The buyer steps into your shoes and inherits the agreement’s terms, timeline and risks. The agreement itself usually controls whether you can sell at all and whether the developer must consent. Urban renewal carries real tax relief: in TAMA 38 owners are generally exempt from the betterment levy (heitel hashbacha) on the added building rights, and in Pinui Binui the levy is typically reduced (commonly cited near 25%) or waived at the local authority’s discretion. Both also carry statutory mas shevach relief and VAT relief on the construction of the existing residents’ apartments, with exact conditions set by the urban-renewal chapter of the Real Estate Taxation Law. The catch is timing: these projects routinely run for years, and the further the project is from a building permit and bank financing, the harder your rights are to price and to sell.

If you own in a building that has signed for urban renewal and now you need or want out, your real problem is this: how much is a promise of a future apartment worth, what can legally transfer, and who has to say yes before money changes hands.

What you are actually selling: rights, not bricks

You are selling your future-apartment rights under a signed agreement, not a finished, registered home. An owner who has signed a TAMA 38 or Pinui Binui resident-developer agreement can still sell, but the buyer steps into that agreement and inherits its terms, timeline and risks. So the thing that sets your price is the status of the agreement, not the look of your current apartment.

The two project types behave differently, and the difference matters to a buyer:

• TAMA 38 reinforces or rebuilds an existing building (strengthening against earthquakes, often adding floors, an elevator, a safe room and a balcony). Owners stay on title throughout; you keep your apartment while extra rights are sold to the developer to fund the work.
• Pinui Binui (“evacuate and rebuild”) demolishes the old building entirely. Residents move out to temporary housing, the developer builds a new project, and each owner returns to a brand-new, usually larger apartment. This is a bigger, slower, all-or-nothing deal.

Note that TAMA 38 is being phased out and replaced by newer urban-renewal tracks, so confirm exactly which framework your building signed under before you describe it to a buyer. For the wider picture of how these programs work, see our overview of urban renewal in Israel.

The five things a buyer will price: a due-diligence checklist

A serious buyer values your rights by reading the deal, not the apartment. Have these ready before you list, because every gap lowers the price or kills the sale:

1. The signed resident agreement. The actual contract between owners and the developer. It defines your future-apartment rights and, critically, any transfer or consent conditions on selling those rights.
2. Developer identity and track record. Who the developer is, what they have built, and whether they are financially solid. The developer is the single biggest risk in the whole deal.
3. The resident lawyer. Owners in these projects are represented as a group by a resident lawyer (usually paid by the developer but acting for the residents). Know who it is and ask them for the current status in writing.
4. Project stage and signatures. Whether the required majority of owners has signed, because a project does not advance until it crosses its signature threshold. A deal at “70% signed” is worth less than one with full consent.
5. Plan approval and permit status. Whether the town plan (taba) is approved and whether a building permit (heter bniya) has been issued. A signed agreement with no approved plan and no permit is the riskiest, cheapest stage. A project with a permit and bank financing in place is the safest, priciest stage.

Two more items a buyer will demand: the guarantees protecting the owners (bank guarantees and securities the developer must post, similar in spirit to the off-plan protections in a pre-completion new-development sale), and, for Pinui Binui, the terms for relocation payments and temporary housing (the developer typically funds rent for an equivalent apartment while you are out, plus moving costs). When you sell, the buyer takes over your right to those relocation payments and temporary-housing funds for the build period.

What transfers, and what restricts the transfer

What transfers is your bundle of contractual rights: the future apartment, the relocation and temporary-housing entitlements, the guarantees, and your share of any common areas in the new building. The buyer steps directly into your obligations too: paying their share of costs the agreement assigns to owners, cooperating with the project, and meeting any deadlines the contract sets.

What restricts it is the agreement itself. Most resident agreements contain transfer or consent clauses: you may need the developer’s written consent to assign your rights, and sometimes the lender’s consent as well, because the financing bank has security over the project. This is structurally similar to a pre-completion resale, where selling is done by assignment of rights and may require the consent of both the developer and the construction-financing bank, and that consent is not always granted. Read your clause before you promise a buyer anything.

If the building is not yet registered as you would expect, your ownership may be proved by a certificate of rights rather than a clean Tabu extract. Our pages on the Nesach Tabu and certificate of rights and Tabu versus Rami versus chevra meshakenet explain which document proves your title.

The pricing upside, with my worked numbers

The upside is real: a buyer is paying not just for today’s apartment but for the larger, newer apartment you are due at the end. In Pinui Binui that future unit is typically bigger and worth materially more than the old one. So your asking price can sit above a comparable non-renewal apartment in the same area, by an amount tied to how certain and how near the future apartment is.

Here are three original estimates I built from the fact-bank figures. Treat them as illustrative arithmetic, not a valuation of any specific deal.

Estimate 1, the betterment-levy saving (my calculation). The betterment levy is normally 50% of the planning-driven rise in value. Suppose the added rights in your project lift value by NIS 600,000. A normal owner would owe a levy of NIS 300,000. In TAMA 38 that levy is generally exempt, so the seller keeps the full NIS 300,000. In Pinui Binui, at a commonly cited reduced rate near 25%, the levy would be about NIS 150,000 instead of NIS 300,000, a saving of roughly NIS 150,000. Basis: 50% statutory rate, TAMA 38 exemption, Pinui Binui reduced rate near 25% from the fact bank. Verify the live status, as TAMA 38 is being phased out and these reliefs are set by statute.

Estimate 2, a certainty discount on the future apartment (my calculation). Say your future apartment will be worth NIS 2,500,000 when delivered. If a building permit is already issued and the bank financing is in place, a buyer might price your rights near 90% of that, about NIS 2,250,000. At the signed-but-no-permit stage, the same buyer might pay closer to 65%, about NIS 1,625,000. That gap, roughly NIS 625,000, is the price of project-stage risk. Basis: future value times a stage-confidence factor I assigned; real factors vary by deal and area.

Estimate 3, the cost of a two-year delay (my calculation). If your rights are worth NIS 1,800,000 today and the project slips two extra years, the time cost at a 3.75% Bank of Israel policy rate (cut on 25 May 2026 from 4.00%) is about NIS 137,000, on a simple-interest basis (1,800,000 times 3.75% times 2). Basis: the current policy rate from the fact bank used as a plain opportunity-cost proxy.

The three risks that can sink your number

Lead with this: every bit of upside is offset by delay risk and developer risk, and a buyer prices both hard.

• Delay risk. Urban-renewal projects routinely run for years from first signature to handover. Ordinary resales already run about 60 to 90 days from signed contract to registration; renewal projects layer plan approval, permits, financing and construction on top of that, often years more. The longer the wait for the future apartment, the lower its present value, and a buyer will discount accordingly. See why property sales get delayed in Israel for the closing-stage delays that also apply here.
• Developer risk. If the developer runs out of money, loses the financing bank, or fails to cross the signature threshold, the project can stall or collapse. The guarantees exist precisely because this happens. A buyer will scrutinise the developer’s solvency and the strength of the bank guarantees before paying for a “future” apartment that may never get built.
• Tax timing and clearance risk. Even with urban-renewal reliefs, a taxable sale of your rights still runs through the normal machinery: the buyer must withhold and remit part of the price to the Tax Authority (commonly 7.5% or 15% depending on when you originally bought), usually once about 40% of the price is paid, and you still need clearance certificates to register the transfer.

Betterment levy and mas shevach in an urban-renewal sale

Two separate taxes can touch your sale, and they are not the same thing.

Betterment levy (heitel hashbacha) is a municipal charge equal to 50% of the planning-driven rise in value, owed by the seller by default. The urban-renewal twist is the relief: TAMA 38 owners are generally exempt on the added rights, and Pinui Binui is typically reduced or waived at the local authority’s discretion. That relief is a genuine selling advantage, but it is not absolute and varies by authority. Our betterment levy guide for sellers covers how the levy is assessed and disputed.

Mas shevach (land appreciation tax) is the national capital-gains tax, normally 25% on the real, inflation-adjusted gain. Urban-renewal projects carry their own statutory mas shevach relief, set by the Real Estate Taxation Law urban-renewal chapter; the exact conditions and caps are technical, so confirm them with your lawyer rather than assuming a flat rate. If you are an Israeli resident selling your sole apartment held about 18 months, you may also reach the single-apartment exemption. Read our pages on mas shevach and the single-apartment exemption before you model your net.

One practical point: a betterment levy you do pay is deductible against mas shevach, along with purchase tax, agent commission, legal fees and capital improvements (keep every receipt). For the full picture of what lands in your pocket, see what sellers keep after costs.

A do-it-now checklist before you list

1. Pull your signed resident agreement and find the transfer/consent clause. Confirm whether you can sell and whose written consent you need (developer, lender, both).
2. Ask the resident lawyer for a one-page status memo: signature percentage reached, plan-approval stage, permit status, financing status.
3. Document the developer’s identity and the guarantees posted, so a buyer can verify them fast.
4. For Pinui Binui, get the relocation-payment and temporary-housing terms in writing; these transfer to the buyer and add value.
5. Confirm the current betterment-levy and mas shevach treatment with a real-estate tax lawyer, because the reliefs are statute-driven and TAMA 38 is in flux.
6. Decide your price band using the project stage, not the old apartment, and be honest with buyers about delay risk.

Selling mid-project is doable, but it is a contract sale dressed up as a property sale, and it lives or dies on the agreement and the developer. Get the paperwork and the consents lined up first.

This page sits in our special situations hub, part of the wider guide to selling property in Israel. If you want a clear read on what your urban-renewal rights are worth and how to transfer them cleanly, tell us about your property and we will map your options.