When is the improvement levy paid in Jerusalem? A guide for property owners (2026)
The improvement levy is a mandatory payment imposed by The Local Planning and Building Committee, due to an increase in the value of a real estate property caused by As a result of plan approval, easement or exceptional use – and not due to an investment by the property owner.
What is the improvement levy and why is it particularly relevant in Jerusalem??
Jerusalem, a city characterized by density, urban renewal plans, building rights additions and preservation, the issue of Improvement levy It is one of the critical issues in any real estate transaction.
Example of an improvement levy
נניח שבעל נכס רכש בית צמוד קרקע בירושלים, כאשר לפי תוכנית בניין עיר (תב”ע) החלה בעת הרכישה ניתן היה לבנות Only one housing unit. A few years later, a new plan was approved that allowed for the construction of Two housing units Or a significant addition of building rights.
In such a situation:
Property value before plan approval: approximately 500,000$
Property value after plan approval: approximately 900,000$
The difference between the two situations is Planning improvement – and half of it is subject to the improvement levy.
What actions create liability for the improvement levy??
Types of operations
The improvement levy may apply, among other things, due to:
Approval of a new city building plan (additional building rights)
Planning relief
Permission for use outside of the scope of the application
Possibility of splitting housing units
התרת בניית מרתף, ממ”ד, בריכה או תוספת קומה
Importance for property owners
Anyone who plans Sell property in Jerusalem or perform Building addition, must check in advance whether there is an improvement and what the expected charge is.
How is the improvement levy amount determined??
Calculating the improvement
The improvement levy is calculated as follows:
The committee appraiser determines the value of the property. before Approval of the plan.
The value of the property was determined after Approval of the plan.
ההפרש בין השניים הוא “השבחה גולמית”.
Improvement levy = 50% of the improvement amount.
Acquisition and reduction options
Important to know: The committee's assessment is not the end of the story. – You can file an objection, appoint a decisive appraiser, and even significantly reduce the amount of the charge.
Who pays the improvement levy – the seller or the buyer??
General rule
The improvement that occurred Until the date of signing the agreement – Applies to the seller
The improvement that occurred After the sale – Applies to the buyer
Defining a Dispute Prevention Agreement
However, in practice, disputes may arise, especially when a new plan is published. Between the date of signing and registration in the land registry.
Therefore, in every real estate transaction in Jerusalem, the agreement must define:
Who bears the improvement levy?
מהו “המועד הקובע” לחבות
How will a future charge be handled?
Deferral of payment of improvement levy and warning notice
Payment deferral
In some cases, you can request the local committee Postpone the payment of the levy Until rights are exercised (for example, during actual construction).
Registering a warning note in the land registry
In such a case:
The committee will usually require registration Warning note in the land registry
This note indicates the existence of a future debt for the improvement levy.
This is a critical issue when selling, financing, or obtaining a mortgage.
Improvement levy and improvement tax – the relationship between them
Capital gains tax deduction
When the improvement levy is paid upon sale of the property:
This is aboutKnown expense
The amount is deducted from the profit calculation for the purpose Appreciation tax
In practice – paying the improvement levy may reduce the improvement tax
Coordination with a lawyer and appraiser
Proper tax planning and coordination between the lawyer and the appraiser are of great importance.
אדמות מנהל מקרקעי ישראל (רמ”י)
Refund or offsets
For properties located on land owned by the Israel Lands Authority, it may be possible to obtain Partial refund of the improvement levy or make offsets, depending on the lease agreements and the type of rights.
Here too – an early legal examination saves tens and even hundreds of thousands of shekels.
Why is it important to have the support of a real estate lawyer in Jerusalem??
Risks in the absence of escort
The improvement levy is one of the most complex areas of planning and construction law. Mistakes in conduct can result in:
For overpayment
To delay registration in the land registry
To damage the real estate transaction
Benefits of professional guidance
Escort of Real Estate Lawyer in Jerusalem, who is also knowledgeable in real estate taxation and improvement levies, allows:
Preliminary examination of expected liability
Achievement on moles
Correct drafting of sales agreements
Significant financial savings
Contact us For more information and an initial examination, you can seek legal advice.
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