Court Rules Couple Owes Higher Property Tax on Finished Apartment

An Israeli couple, Lior and Efrat Tusia-Cohen, will pay significantly more in purchase tax after a court ruled their newly bought apartment was finished, not a shell.

They purchased the apartment in Ramat Hasharon in December 2022 for 9.45 million shekels. The couple argued the apartment was unfinished, requiring 600,000 shekels in work, and thus should be taxed at 6% as a "building." The tax authorities disagreed, classifying it as a finished residence and applying a higher tiered tax rate of 8% to 10%, as it was not their sole property.

The couple claimed essential fixtures like toilets, flooring, doors, and a kitchen were missing. However, evidence, including photographs taken by a municipal inspector eight days after the purchase, showed the apartment was largely complete. These images depicted tiled and painted walls, parquet flooring, aluminum windows with electric blinds, a central air conditioning grill, and a finished bathroom with a shower and toilet. A modern kitchen with a sink and preparation for a dishwasher was also installed.

District Court Judge Shmuel Bornstein sided with the tax authorities, stating that minor incomplete finishing work did not negate the apartment's status as a residence. He noted that the couple's own expert witness report, submitted in a separate lawsuit against the contractor, detailed the presence of a kitchen, toilets, and plumbing, contradicting their claims in the tax appeal. The judge criticized the couple's inconsistent testimony and the deliberate withholding of evidence, finding it difficult to rely on their statements.

Bornstein concluded that the apartment was unequivocally a "residential apartment" and the higher tax rate was justified. The couple was also ordered to pay 40,000 shekels in legal expenses due to their conduct.