The holiday season is almost upon us – a time for merriment and joy. Unfortunately, the combined pressure of family events and financial stress also means we see an increase in the divorce rate immediately after the holiday season. One British law firm even offers a "Divorce Voucher", which has been much in demand as a gift for the holiday season.

For many couples the division of matrimonial assets, already a difficult issue, is further complicated by the problem of property abroad. What happens when the matrimonial assets include a holiday home in Israel? Do they need to get a divorce in Israel as well? Will the property settlement in their home country be sufficient to transfer their property in Israel?

Q: My wife and I bought an apartment in Herzliya five years ago and have recently divorced here in England, where we both live. Under the terms of the property settlement, the apartment is mine. How do I get the apartment put into my name? Will I have to pay tax on this?

A: Any transfer of real property in Israel is potentially a taxable event. However, under section 4A of the Property Tax Law (Appreciation and Acquisition) 1963, a transfer of property in the framework of a divorce is not taxable. That's the good news. The bad news is that a "divorce" in this context is one granted by an Israeli court. The Land Registry will not accept a foreign divorce or property settlement for this purpose.

One option is simply to go ahead and transfer the property in any event – as if your ex-wife were simply transferring her share in the apartment to you for no consideration. However, although the "sale" of her share may well be exempt from tax (under one of the various exemptions available on the sale of residential property), purchase tax would still be levied on you for the market value of her share. In addition, if your ex-wife uses her tax exemption for this reason, or "burns" an exemption as the jargon here would term it, this will affect her ability to sell or transfer property using an exemption from tax in the future.

Another option would be to apply to have your English court order recognized by the Israeli courts in order to allow the apartment to be transferred free of any property tax. The Enforcement of Foreign Judgments Law 1958 allows for both the enforcement and the recognition of foreign civil judgments. We have successfully used this to gain recognition of a foreign property settlement, using a

relatively simply procedure and on the basis of written submissions alone. This is not a divorce application and does not concern your status but is a request to the court to recognize the property settlement for the purpose of transferring property here in Israel. On the basis that your foreign divorce order fits the requirements set out in the law, the Israeli court will agree to your request.

Once the court has granted the application, the Israeli judgment can be submitted to the Land Registry, in the same way an Israeli divorce would be submitted, in order to have the apartment transferred into your name.


This article is presented for your general information and does not constitute legal advice. You should obtain specific legal advice about your estate before taking (or deciding not to take) any action. Please contact Caroline for further information.© SaftWalsh 2011. All rights reserved.

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