whether the apartment purchased for the minors is their only apartment in accordance with the provisions of section 9(c1c) of the Law, and therefore they are entitled to the purchase tax brackets of a single apartment, as the appellants claim; Or is it part of all the apartments of the family unit to which each of them belongs, and therefore it is not their only apartment at the time of purchase?
Legal Background:
- The obligation to pay purchase tax is anchored in section 9(a) of the law, which states that a purchaser of a right in real estate is liable to purchase tax. Section 9(c1c) of the Law establishes a designated tax rate for the purchase of a residential apartment - as opposed to the purchase tax that applies when purchasing another right in real estate, and provides relief to the purchaser of a single residential apartment.
In accordance with the provisions of the section, when purchasing a single residential apartment, lower purchase tax brackets apply than those that apply when it is not the purchase of a single apartment.
- Copied from Nevoand what is a "single apartment"? - Section 9(c1c)(4)(a) of the Law states in this regard as follows:
'Single apartment' - a residential apartment that is the only apartment of the purchaser in Israel and the region as defined in section 16a; ....
Later on, in section 9(c1c)(4)(c) of the Law, the provision known as the "presumption of the family unit" was determined, and its interpretation and manner of application are the focus of the appeal:
"A purchaser and his spouse, with the exception of the spouse who lives permanently separately, and their children under the age of 18, with the exception of a married child or an orphaned child from one or both of his parents, shall be considered as one purchaser."
- The presumption of the family unit creates a fiction: the individuals of the family unit, which includes the couple and their minor children, will be considered as one purchaser. A similar provision exists, as is well known, with regard to the exemption from betterment tax, in Chapter V1 of the Law, which applies at the time of the sale of a single qualifying residential apartment, and as set forth (with respect to the presumption of the family unit, in this context) in section 49(b) of the Law.
- The courts have noted that the presumption of the family unit enshrines two purposes, which were referred to in the case law: "positive purpose" and "negative purpose" [see, for example: Civil Appeal 4298/18 Real Estate Taxation Administration, Civil Case v. Roy Blank [Nevo] (April 20, 2021) (hereinafter: "the Blank case"), paragraph 8 of the judgment of the Honorable Justice A. Grosskopf - and in the case law cited there (the references below to the Blank case, unless otherwise stated, The judgment of the Honorable Judge Grosskopf, which reflects the opinion of the majority there]]:
- Positive purpose: Providing tax relief to a family unit, as the reference unit that is usually used for a person's residence.
- Negative purpose: Preventing tax planning, by way of registering assets in the name of the family unit's members, in a manner that does not fully reflect reality and which is intended to maximize the number of tax breaks that the family unit will receive.
- The courts were required to interpret the presumption of the family unit, in a series of rulings. The vast majority of these rulings dealt with the matter of "spouses", and hardly dealt with the case of minors (with the exception of two rulings, which will be mentioned shortly).
The last major judgment given on this issue, as of now, is the judgment in the Blank case - and therefore most of the references and reference will be to this judgment - which formulated and shaped the current legal situation with regard to the presumption of the family unit. Of course, and as was clearly written in the judgment, the Blank case is a continuation of a story that is written in the sequels [to this image, which originated from the words of Prof. Ronald Dworkin (see ibid., at para. 6)], which began to be written in the rulings that were given on this issue over the years.