You are selling your apartment in Israel, the deal is signed, and the municipality suddenly claims several hundred thousand shekels. It is not a mistake: it is the Heitel Hashbaha, the betterment levy, one of the most poorly anticipated costs of an Israeli property sale. In 2026, with planning schemes multiplying, it affects a growing number of foreign owners.
I. What exactly is it?
The Heitel Hashbaha (היטל השבחה) is a levy collected by the local planning committee (Vaada Mekomit (ועדה מקומית)), not by the national tax authority. It captures the owner’s enrichment when a planning decision — a new scheme, a relief, a change of designation — increases the value of the property.
Two features make it formidable:
- Its rate: 50% of the planning gain generated by the decision. Not 50% of the price, but half of the increase in value.
- It is due even if you have built nothing. It is enough that additional building rights were created on your plot.
Do not confuse it with Mas Shevah (מס שבח) (capital gains tax, 25% of the actual gain, paid to the State). Both can apply to the same sale.
II. When does it become payable?
The triggering event is the approval of the scheme. Payment, however, is deferred until the “realisation of rights” (Mimoush Zchuyot (מימוש זכויות)), that is:
- the sale of the property;
- the grant of a building permit (Heter Bniya (היתר בנייה));
- actual use of the new building rights.
This is why the seller is the natural debtor. In practice, the Tabu (טאבו) will not register the transfer of ownership without the municipal certificate (Ishur Iriya (אישור עירייה)), which is issued only once payment is made.
III. Why this matters in 2026
Several developments converge:
- the acceleration of urban renewal (Hitchadshut Ironit (התחדשות עירונית)) projects and of TAMA 38 / Pinuy-Binuy (פינוי בינוי) schemes;
- the major infrastructure plans, in particular around the future Tel Aviv metro stations, which massively densify entire residential neighbourhoods;
- the revision of land valuation methods by certain municipalities.
The result: owners who never asked for anything find themselves sitting on building rights whose value they will have to share with the municipality the day they sell.
IV. Exemptions: what the law provides
The Third Addendum to the Planning and Building Law (התוספת השלישית לחוק התכנון והבנייה) sets out several exemptions. The most useful for a private owner:
- Section 19(c)(1): exemption for the construction or extension of a dwelling intended for the occupation of the rights holder or a relative, up to 140 sqm (a storage room may, subject to conditions, be included in that area). Beyond that, the levy is due only pro rata to the excess.
- Urban renewal projects benefit from specific exemption regimes, which vary with the structure of the deal.
- Section 19(a) allows the local committee to grant relief in view of the owner’s difficult financial situation.
These exemptions are never automatic: they require a reasoned and documented application.
V. Challenging the assessment: a real lever
The assessment notice rests on a valuation commissioned by the municipality. The owner is not bound to accept it. Two main routes are available:
- referring the matter to an independent deciding appraiser (Shamai Machria (שמאי מכריע)) appointed by the competent authority;
- filing an appeal before the appeals committee (Vaadat Erour (ועדת ערר)).
Gaps between the municipal valuation and an independent one are frequently significant. Because the appeal deadlines are short, the response must be immediate.
Conclusion – Why work with a lawyer specialised in Israeli real estate taxation?
The Heitel Hashbaha is a technical levy, sitting at the border of planning law and taxation. It is dealt with well before signature: by identifying the schemes applicable to the plot, quantifying the real exposure, checking which exemptions can be relied on, and clearly allocating the burden between seller and buyer in the contract.
Discovering this levy after signature means losing every negotiating lever — and sometimes seeing the sale blocked for want of a municipal certificate.
It is with this in mind that the Firm ABITBOL & ASSOCIES, drawing on its expertise in Israeli and international real estate law, supports its clients at every stage of their sale, from the analysis of building rights through to challenging the municipal assessment. Our lawyers ensure that your interests are protected and that every step is carried out in complete security.
13 Av Hubert Germain – Paris 16ᵉ
Tel: + 33 (0)1 78 90 03 73
Fax: + 33 (0)1 77 74 63 99
13 rue Shimon ben Shetah, 9414713, Jérusalem
Tel: + 972 (0)2 595 63 45
Fax: + 972 (0)2 591 63 26
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