Transferring property ownership between close family members in Israel is a common procedure known as a “gift transfer” or ha’avara l’lo tmura (a transfer without consideration). This process is different from a standard sale and offers significant tax benefits, but it must be handled correctly by a real estate lawyer.
Under Purchase Tax Regulation 20, a qualifying gift from an individual to a defined relative is taxed at one-third of the purchase tax otherwise due. The listed recipients include a spouse, parent, descendant and the descendant’s spouse, brother or sister. A qualifying gift of a shared home to the spouse who lives there can instead be exempt under Regulation 21. The separate capital-gains exemption has a different definition of relative: its sibling relief generally requires the transferred property to have come from a parent or grandparent by gift or inheritance.
A qualifying gift under section 62 can defer the giver’s capital-gains tax rather than erase the property’s tax history. The gift recipient’s later claim for a residential-sale exemption may be subject to a separate cooling-off period: generally three years if the home served as the recipient’s permanent residence, or four years otherwise, with additional rules for minors and gifted purchase funds.
The Process:
- Obtain Legal Advice: Have an Israeli real estate lawyer assess the parties’ interests, prepare the gift documents and check the tax and registration requirements.
- Sign Declarations: The giver and receiver sign a gift affidavit, declaring the property is being transferred without any monetary exchange.
- Report to Tax Authorities: The transaction is reported to the Israel Tax Authority within 30 days. Your lawyer will file the necessary forms to claim the tax exemptions and discounts.
- Register the Transfer: Obtain the required approvals and register the transfer with the body that holds the property’s rights records, which may involve the Land Registry, the Israel Land Authority or a housing company.
The exemption or reduced rate is requested inside the sale and purchase declaration that the seller and the buyer each file with the Israel Tax Authority within 30 days. For this purpose a transfer without payment still counts as a sale. The Tax Authority’s declaration service lists Form 7000 for a qualifying dwelling with no existing or expected building rights that is sold with a full Mas Shevach exemption, Form 7000B for sellers of business inventory such as contractors, and Form 7002 for any other case. Form 7002 lets the seller name the exemption claimed by section and the buyer name a purchase tax exemption or reduction by regulation. Your lawyer chooses the form that fits the transfer. This follows the Tax Authority’s service page updated on 19 May 2025, and forms can change.
Understanding the process for transferring property between family members can save you a substantial amount in taxes, but it is crucial to seek professional legal guidance to ensure all regulations are met.
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