Very often a purchaser has reasons to hide the fact that he is purchasing real estate. Under Israeli law this is possible because the purchase can be facilitated by a trustee. The trustee’s name appears in the contract as the purchaser and his name will appear in the land registry as the purchaser and owner of the title at the close of the deal.
A series of documents are enacted between the trustee and the actual buyer to protect the buyer’s rights. The only government authority that will know who is the actual purchaser are the tax authorities.
Within 30 days of the signing of the contract the purchaser must notify the tax authorities that he is the actual purchaser. The tax authorities will ask to see the paper trail of the movement of the money from the purchaser to the trustee or to the seller of the property for the transaction. If this process is followed correctly then there will be no taxes (purchase tax, capital gains tax or otherwise) at the time of the transfer of title between the trustee and the actual purchaser.
It is therefore important that your real estate attorney follows this process at the time of the purchase and that the proof of the source of the funds be documented. Should the process not be followed correctly then land taxes may be levied at the time of the transfer of title between the trustee and the purchaser.
