Obligation to declare the origin of funds in real estate transactions
The Israeli tax authorities now require lawyers to disclose sources of financing in real estate transactions, particularly when buying an apartment in Israel.
You will now need to make an online declaration, identifying the buyer (as was previously the case) and detailing the source and origin of the funds used to purchase the property.
This obligation is part of the Cash Minimization Act, which will come into force on January 1, 2019.
It includes a number of restrictions, such as a ban on cash transactions of any kind if the total amount of the transaction exceeds 11,000 Shekels.ALSO READ: How is property income taxed in Israel?
The law also stipulates that in all real estate transactions, including residential housing, the source of funds must be declared.
This new law, which will take effect from January 1, 2019, will apply to the following purchases (non-exhaustive list):
- Commercial premises, etc...
This declaration applies to all buyers. From first-time buyers to seasoned investors.
The report must be supplemented by any documentation that may indicate the source of funding. (Proof of transfers from abroad, tax notices, etc.).
Shay Aharonovich, Head of the Property Tax Division of the Israeli Tax Authority, said that, as the buyer does not always know where he will get the money for the transaction, he will authorize the issue of the report within six months of the signing of the transaction. An Internet platform is to be set up for this purpose in the next few days.
"As usual, the tax authorities will allow a few months to get used to the new law.
After that, any failure to declare financial resources will result in substantial fines and penalties," said Aharonovich.
This represents a major change in the approach to tax authorities in Israel with regard to the use and circulation of species.
Within a month, the source of every shekel invested in real estate in Israel will have to be declared.
This first decision by Israel's tax authorities heralds even more drastic changes in the future.
If you own real estate in Israel, it becomes very important to make a complete review of your assets in Israel.
Don't hesitate to contact us to avoid unpleasant surprises.