The betterment levy (hetel hashbacha) is a payment to the local planning and building committee that owners pay when their property’s value rises following a planning decision. Many discover it only when applying for a building permit or selling an apartment, and the amount can be a surprise.
What triggers a betterment levy?
Approval of a town plan, a relief (hakala) or a non-conforming use that increased the property’s value. The levy is half of the betterment, meaning half the difference between the value before and after the decision, based on an appraiser’s assessment.
When is it paid?
Usually upon “realization of rights”: on sale, on receiving a building permit under the plan, or when the rights start being used. The person liable is the owner at the time the plan was approved. On a sale, the levy generally falls on the seller unless the parties agreed otherwise.
Main exemptions
- Expanding or building a residential apartment up to 140 sqm for the owner’s or a relative’s residence, subject to conditions.
- Special exemptions and rules for TAMA 38 and urban renewal. See also TAMA 38, the Shaked alternative or Pinui Binui.
- Other exemptions, for example certain construction for public institutions and protected spaces.
Can the assessment be challenged?
Yes. The owner can file an objection or request a deciding appraiser, and in some cases appeal to the appeals committee, within short deadlines. It is worth reviewing the assessment with a lawyer and an appraiser as soon as it arrives.
Betterment levy in a sale
A buyer should check whether there is a betterment levy debt on the property. A seller should know that without a municipal certificate of no debts, including betterment levy, the property cannot be registered to the buyer. On the difference from capital gains tax see capital gains tax on selling an apartment.
Where do you go from here?
Every deal and every property is different, and a small detail in a contract or registration can be worth a lot of money. At Paz Israel & Co. Law Office we support buyers, sellers, landlords and property owners, from the first check to registration at the Land Registry. For more information see our real estate lawyer page, or contact us to schedule a meeting in Tel Aviv, Jerusalem or Modi’in.
This article provides general information, is correct as of the time of writing, and does not constitute legal or tax advice or a substitute for reviewing your specific circumstances.