Legal Updates

A couple who run a joint household but entered into a prenuptial agreement may be entitled each to separate tax exemptions

April 20, 2021
Print

A couple lived in an apartment purchased by the husband prior to the marriage, and which according to the prenuptial agreement between them remained in his sole ownership. The couple later purchased an apartment together, and the woman sought to obtain, regarding her share of the purchase, a tax exemption or at least a discount for the purchase of a single apartment.

The Supreme Court held that because the prenuptial agreement between the couple was authentic and long-standing they should be each deemed a separate entity for tax exemption purposes. Israeli Law stipulates that a couple and their underaged children will be considered one unit for the purpose of tax exemptions and discounts when purchasing a single apartment. However, the law stipulates two exceptions: A couple who live separately on permanent basis, and children who are married, even if they have not yet turned 18. Other cases in which a couple will not be deemed one family unit are when purchases made prior to the marriage and when the couple maintain property separation in relation to all or part of the real estate assets they own. The last exception exists as long as the prenuptial agreement between them is not artificial and as long as it is not neglected during the marital life, even if the couple run a joint household or live in an apartment belonging to one of them only. Here, the prenuptial agreement was authentic, contained complete property separation and was followed by the couple throughout the years. Thus, even though the couple ran a joint household and the husband bore the expenses of the apartment, the couple should not be seen as a single unit for tax purposes and the woman is entitled to the benefits set by Law.