Lawyers
Transfer and sale of property in a divorce- realeted
In divorce proceedings, the couple divides property among them, this also includes real estate. This usually includes the couple’s apartment, and depending on the situation, there may be additional properties. This raises the question of whether the transfer of property in the event of divorce constitutes a tax event like a regular real estate transaction. This important question will be answered in the article before you.
By Igal Mor, Adv. & Notary
Accuracy in Legal Advice. Excellence in legal support.
An Introduction
When spouses decide to divorce, they must share the joint property they have accumulated throughout their life together. If they own an apartment or additional real estate property, they must liquidate the partnership in one of two ways: selling the property to a third party or transferring/selling the property between the spouses themselves. This decision should be based on considerations of economic viability. With that said, due to the payments that apply to a real estate transaction, the question arises whether the transfer or sale of property between spouses, as part of a divorce proceeding, constitutes a real estate transaction for all intents and purposes. If the answer is in the affirmative, then the selling spouse will be subject to praise tax and the spouse purchasing the purchase tax.
Transfer and sale in case of divorce
According to the Real Estate Taxation Law, the transfer of rights in real estate between spouses does not constitute a real estate transaction and therefore is not taxable to either party. This is when the transfer of rights, whether in return or not, was made according to a judgment and the transfer can be between the couple themselves or between them and the children. Hence, there is no obligation to report to the tax authorities in respect of this transaction. The main action that the spouses have to take is to regulate the transfer of rights in the registry.
Registration of Rights on the name of the Partner
As stated, the transfer of real estate in related with a divorce is not a tax event and therefore, the parties only have to take care of registering the right in the registry. In order to carry out the registration, the relevant documents must be submitted, including the divorce agreement which was given the validity of a judicial ruling, confirmation of the absence of debts from the local authority, and more. At the end of the registration process, it is very important to issue an up-to-date letter of registration, in order to have a reference to the fact that the transfer of rights in the property has indeed been completed. We will clarify that in the event that the property is not registered in the registry, but in the Israel Land Authority or a mortgage company, the registration procedure will be done there and thus the approval of the transfer of rights will be obtained from the same body.
Is it always worth it?
It could be argued that the transfer or sale of a property in related with a divorce is always worthwhile since this action is tax-exempt for both parties. However, it is important to know that when the party who purchased the property, seeks to sell it, he is no longer covered by the tax exemption granted to the sale transaction at the time. That is, he will be liable to appreciation tax as in a regular real estate sale transaction. Therefore, if one of the exemptions from praise tax (e.g. the sale of a single residential apartment) does not apply to the seller in this situation, the transfer of the property would have been a mere tax deferral.
Support From a Lawyer is Essential
Transferring and selling a property in the event of a divorce can undoubtedly be the ideal solution for the couple as it does not constitute a tax event. However, as we have seen, the buyer side may have a liability tax in the future and therefore, before making a decision to sell or buy the residential apartment, or any other joint real estate property of the couple, it is important to consult a lawyer who can examine the taxation aspect. Each of the parties.
The Real Estate Planning and Construction Department in our firm specializes in legal support of real estate transactions in Jerusalem and abroad. Transfer of rights in real estate is not a simple technical procedure and requires follow-up and reporting to various authorities.
Even if a family lawyer who does not specialize in real estate matters has represented you, you can contact us for the transfer of rights.
Are you in a state of dissolving a partnership? We will be able to work for you to transfer the rights according to the outline that you have agreed on.
