This amendment does not apply to the matter before us, but the appellants sought to learn from it that in accordance with the situation that existed prior to the amendment, an apartment that has not yet been completed, such as the apartment that is the subject of the appeal, is not a residential apartment. I will clarify, therefore, that I do not believe that this amendment will help the appellants. Indeed, the definition of a "residential apartment" has been expanded, and it now includes any apartment that does not have the facilities normally found in a residential apartment, which enable its use for residential purposes, but also a "shell apartment" that includes only external walls, but it is clear that insofar as the apartment is in which the aforementioned facilities are located, and that it has a clear potential for living, and insofar as there is an intention to make use of the apartment for residential purposes, it should be regarded as a "residential apartment".
- It should also be noted that over the years, case law has taken a more flexible approach with regard to the residential designation test in the matter of betterment tax, when at first emphasis was placed on the presence of physical facilities and accessories that normally characterize a residential apartment (kitchen, toilet, shower, etc.; see: Civil Appeal 668/82 Koresh v. Land Betterment Tax Administration (May 16,1985)), while later it was argued that the formal objective test of the presence of physical facilities in the apartment is not the be-all and be-all (Civil Appeal 2170/03 Marguerite Schachner v. Land Appreciation Tax Administration (September 12,2004)); Civil Appeal 1046/12 Frederic Hakim v. Netanya Land Taxation Administration (January 21,2014)), and emphasis was placed on the potential of the property to be used for residential use, while it was clarified that consideration must be given to all the concrete factual circumstances (see: Appeals Committee 1701-07-24 Hannah Yaacobi v. Real Estate Taxation Administration (August 17,2026); hereinafter: "the Yaacobi case"). Therefore, even a property located in a residential building that is connected to the electricity and water network can also be considered a residential apartment, even though it does not yet have the aforementioned facilities and knights, since they can be easily installed and added (see Appeals Committee (Tel Aviv) 28079-10-15 Nira Maayan v. Tel Aviv Real Estate Taxation Administration (July 19,2020). Needless to say, if this flexibility was adopted for the purpose of defining a "residential apartment" for the purpose of betterment tax, all the more so it should be adopted for the purpose of purchase tax, as can even be deduced from the above quotation from the judgment in the Friedman
- In any event, I am of the opinion that whether according to the narrower objective test, which examines the existence of facilities normally located in a residential apartment, and all the more so according to the broader test, which examines the residential potential, the apartment before us meets the definition of a residential apartment for the purpose of purchase tax.
- There is no dispute as to the existence of the subjective test in the case at hand here; The appellants' intention was to live in the apartment, and indeed in October 2023 (about ten months from the purchase and about seven months from the delivery of possession) they moved into it.
- As for the objective test, first of all, consideration must be given to the fact that the apartment was built according to a residential building permit "up to the key" according to detailed technical specifications that were part of the execution agreement, and received both Form 4 and Form 5 (Certificate of Completion). In the certificate of completion (Appendix 13 to the Respondent's affidavit) it was explicitly stated that the construction had been completed and that the building was fit for use. In addition, the apartment was charged residential property taxes and included connections to infrastructure, division into rooms, air conditioning systems, parquet flooring, a kitchen (including an "island"), doors, and installed sanitary ware. In this way, the apartment before us differs from the apartment discussed in the matter of the Appeals Committee (Tel Aviv) 39040-09-22 Chen Krasny v. Tel Aviv Land Taxation Administration (March 16,2025), in respect of which it was determined that it did not meet the objective test of the definition of a "residential apartment", when the apartment in that case was described as follows: the ceiling of the apartment made of exposed concrete; the absence of final flooring; the absence of a kitchen; the absence of interior partitions, the absence of a permanent connection to electricity and water, and the absence of a shower. In addition, an application was made to the municipality in which it was claimed that this was a shell apartment that was not fit for habitation (on the significance that should be attributed to the taxpayer's representation to the municipality, see the Yaacobi case). On the face of it, the case before us is completely different.
- 00Contrary to the appellants' claim, in the sale agreement the sale is defined as a "housing unit" and not as a shell apartment, and it was determined that various "connections" were installed in it. The agreement indicates that the apartment has air conditioning, electricity and shutters systems installed, and that it has a kitchen, cabinets, and other facilities and accessories. As stated, the apartment was charged residential property taxes as of February 20,2022, i.e., even before it was purchased by the appellants. Subsequently, an exemption was received for "empty property". Needless to say, this too should be shown that this is a residential apartment, even if it is "empty".
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- Also from the photographs taken in the apartment in real time - photographs (in color) taken by the municipal inspector who visited the apartment on December 28,2022 (Appendix 17 to the affidavit); photographs (in color) taken by the sellers shortly before the apartment was delivered and transferred to the respondent (Appendix 15 to the affidavit); photographs (in black and white) that were attached to the expert opinion (marked as Exhibit M/1) - and from what is described in the expert opinion, one can also get an impression of the condition of the apartment, which includes accessories and facilities normally found in a residential apartment: Electrical and communication accessories (including, sockets, circuit breakers, lamp houses and light fixtures), parquet cladding, deck flooring, transparent railing (although not completed), entrance door and doorbell, interior doors, toilets with toilets installed, shower with shower and dash, ceramic cladding, plaster and paint, modern kitchen including an "island", faucet and sockets, a central air conditioner "grill", a connection to a washing machine, aluminum windows, electric blinds.
- The purchase of the apartment in AS-IS status and the fact that some of the finishing works were not completed, or that there are construction defects in the apartment for which a claim was filed against the executing contractor, does not detract from its classification as a "residential apartment", especially when it appears that the finishing work is relatively minor, certainly in the eyes of a reasonable person, and as can be seen from the material in the file, including the expert opinion. Indeed, it is possible that the appellants sought to upgrade their apartment, to make some design changes in it, including changes whose cost is not negligible, and not to suffice with the apartment to the standard that the execution contractor was required to deliver according to the execution agreement, but I do not believe that this is sufficient to turn the apartment into a shell apartment or a "building".
Go out and see that if this were the case, the result would be that whenever renovations are carried out in a residential apartment, and certainly extensive renovations that include the replacement of sanitary ware, the replacement of the kitchen, wall cabinets, etc., the apartment during the period of the renovations would be a "building" with all that this entails. This result is unreasonable and contradicts the idea behind the special arrangements relating to residential apartments - the tax relief for a single residential apartment, and on the other hand, the tax increase for a residential apartment that is not a single - and this case will prove it.
- As to the sale agreement, it does indeed indicate that the finishing works were not completed by the end of the works, but it does not include any details regarding those works that have not yet been completed, and the respondent is correct in claiming that this is the duty of the appellants. Moreover, this is an apartment that was sold when together with it the sellers transferred their rights to the appellants under the performance agreement, which includes an undertaking to build an apartment "up to the key". In accordance with the definition of a "residential apartment", this is sufficient to classify the property as a "residential apartment". I will add that the case at hand is more similar to the case discussed in the case of AppealsCommittee 59441-10-17 Mary Lesman v. Central Real Estate Taxation (Nevo 27.4.2020), as opposed to the case discussed in the case of Appeals Committee 2651-05-23 Mike Menashe Michaeli v. Central Real Estate Appreciation Tax Administration (January 12,2026) (it should be noted that an appeal has been filed against the judgment in the Michaeli case that has not yet been decided).
- Moreover, the sellers reported the transaction as a transaction for the sale of a "qualifying residential apartment" and requested a linear calculation of the beneficiary in accordance with section 48A(b1)(5) of the Real Estate Taxation Law. On the face of it, this report not only does not contradict the sale agreement, but, as stated, is consistent with the evidence and exhibits submitted in the framework of this proceeding, which indicate that the apartment was indeed not a "shell apartment", as claimed, but rather a residential apartment for all intents and purposes. The seller stated in the affidavit he submitted to the respondent (Appendix 14 to the affidavit on behalf of the respondent) that at the time of the sale the apartment was connected to electricity and water, divided into rooms and included installed toilets and a kitchen. Insofar as the appellants disagree with this version of the seller, there was no impediment to their time, and they did not do so, and therefore it is in their obligation. In any event, this affidavit is consistent with the rest of the material, and especially the photographs of the apartment, which allow us to get an unmediated impression of the condition of the apartment close to the date of its purchase.
- I do not believe that it is possible to attribute to the sellers an intention to submit a report that does not correspond to the condition of the apartment, solely in order to avoid tax, especially in view of the fact that this is a fairly low tax amount (ILS 14,000). Even the argument that it was agreed between the sellers and the appellants that the sellers would not submit an application for an exemption from betterment tax was made in vain and without any reference, and in any event, even if there was such an agreement, this does not change the conclusion at hand.
- To all this, it should be added that the appellants filed, as stated above, a claim in court against the contractor for defects that were discovered, according to them, in the apartment, and attached to the prosecution the expert opinion, who visited the apartment on February 13,2023, prior to the delivery of possession to the appellants and a year after it was delivered to the sellers. From this opinion, which relates to various defects in the apartment and the facilities located in it, it can be learned that at that time the apartment included parquet cladding, ceramic cladding in the bathrooms, whitewashed walls, a safe room door, a number of toilets, preparation for a washing machine and a kitchen with a sink and a tap. Indeed, the opinion relates to various defects in the apartment, but it is precisely from it that we can learn that this is an apartment that includes all the essential facilities for the purpose of living, and at most that non-material supplements are required, in accordance with the reasonable person's intentions.
- It should be noted that the appellants chose not to attach to their affidavit the statement of claim and the expert's opinion, but only the settlement agreement signed with the contractor (Appendix 2 to the appellants' affidavit). According to the respondent, which were not concealed, he contacted the appellants in order to receive the documents of the claim file, but it was claimed by the appellants that they did not have the file. Therefore, the respondent submitted a request for review to the court, which, as it turns out, the appellants objected, as appears from the document marked as exhibit M/2. Ultimately, the court approved the application and the documents of the file reached the respondent, including the said opinion. Needless to say, this conduct of the appellants, who sought to conceal from the respondent and the appeals committee such an important and vital document, which is most relevant for the purpose of deciding the issue in dispute, constitutes a significant and even demanding lack of good faith.
- At this point, it is even appropriate to pay attention to the appellant's conduct in his cross-examination in the evidentiary hearing when he was shown the photograph of the kitchen that was taken in the apartment (page 231 of the respondent's affidavit). Strangely, the appellant claimed in his interrogation that this was not his own apartment, but perhaps another apartment in the building. In this way, the appellant continued to argue, even when he was presented with the same photograph (in black and white) that the expert on his behalf had attached in the claim he filed against the contractor (p. 106 of M/1). It is also puzzling to his version that he was unable to obtain the original material from the expert, including the color photographs that were attached to the opinion. In view of the importance of the matter and its impact on the question of the reliability of the appellant's testimony, I found it appropriate to bring what he stated in his testimony, and at length (transcript of December 3,2025, pp. 26, s. 10 - p. 28, s. 12; emphases added):
"Adv. Wheeler: I refer to page 106 Your honor, in the bottom picture below we see a kitchen, we also see in the top picture above, we see the two windows, it is a kind of duplex apartment with a display case that needs to be built there, which is probably what was built. Now, I want to show you the picture on page 106 and compare it to the picture for me, page 106 of the respondent's affidavit, and compare it to the picture on page 231 of the respondent's affidavit and tell me if it's not the same kitchen. You can see exactly the faucet, its angle.