Court Rejects Extension for Betterment Tax Relief in Ra'anana Project

The Appeals Committee at the Lod District Court recently rejected a request by a developer and a land seller to extend the qualifying period for a betterment tax (mas shevach) relief. The committee chairman, Judge Avi Gorman, ruled that the Land Taxation Tax Authority lacks the statutory authority to extend the 42-month period mandated by the legislature for completing construction as a condition for the tax break.

In June 2020, a limited partnership acquired rights from the seller in two land plots in northern Ra'anana. Under the agreements, the developer committed to obtaining a Form 4 occupancy permit—certifying the connection of the structures to infrastructure—within 42 months. The transaction report included a request for a betterment tax relief, pursuant to a temporary provision in the Economic Efficiency Law designed to incentivize land sales and residential housing construction. The tax break would have allowed the seller to pay a reduced betterment tax rate of 25%, provided that construction was completed by mid-December 2023.

However, days before the deadline, the developer asked the tax authority for a ten-month extension, citing the COVID-19 pandemic, related lockdowns, and the outbreak of the Iron Swords war. The request was denied due to a lack of legal authority. Construction was ultimately completed in April 2025, with a delay of approximately 16 months. In their appeal, the developer and seller sought to extend the period until the actual completion date, arguing that the legislative purpose was fully achieved by building 89 apartments and that denying the tax break due to exceptional circumstances beyond their control was unjustified.

Judge Gorman adopted the position of the Tax Authority, clarifying that his discretionary power to extend deadlines under Section 107 of the Land Taxation Law does not permit altering substantive statutory conditions required for tax benefits. The ruling emphasized that accepting the appellants' stance would effectively rewrite the statutory timeline from 42 months to 58 months. The committee ordered the appellants to pay 25,000 NIS in legal expenses.