What Is the Betterment Levy?
The betterment levy (Hetel Hashbacha) is a tax imposed by local authorities under the Planning and Building Law. It applies when a zoning or planning change approved by the local planning committee increases the value of a property. The owner must pay 50% of the value increase to the local authority.
When Does the Levy Become Payable?
The levy crystallises and becomes payable at one of two triggering events: when a building permit is issued for works that take advantage of the new rights, or when the property is sold. Until one of these events occurs, the levy is a latent liability that may not be visible in a routine property check.
How to Check for Betterment Levy Exposure
Before purchasing a property, a buyer should request the local authority's betterment levy file (tik hashbacha). This reveals whether any approved planning changes create a levy obligation. If a levy exists and the seller has not disclosed it, disputes can arise over who bears the cost at closing.
Who pays the betterment levy when selling property in Israel?
The betterment levy is legally owed by the property owner at the time the triggering event (sale or permit issuance) occurs. In practice, the parties may negotiate in their contract who bears the cost. Buyers should check for outstanding betterment levy exposure before signing, as an undisclosed levy can significantly increase the effective purchase price.
