A successful real estate transaction is not measured only by the price of the property, but also by how the stages of the deal are planned and how the accompanying tax aspects are managed. This was exactly the case of a client who approached our firm ahead of purchasing a plot designated for high density residential construction in the Sharon area, with the goal of promoting a small development project.

Background: An opportunity with both potential and risk

The client identified an attractive plot at a competitive price, but already at the early stages it became clear that:

There was planning uncertainty regarding the actual building rights.
The transaction could be subject to significant capital gains tax, purchase tax, and betterment levy.
The timeline was tight, and a wrong decision could turn the investment into an unprofitable one.

The goal was clear: to realize the potential, without being exposed to planning risks and unnecessary tax burdens.

The call came late in the evening. On the other side was a young entrepreneur, excited and under pressure. He had found a plot in the Sharon area that seemed like a once in a lifetime opportunity: a good price, an excellent location, and a plan to build a small residential building. But something was bothering him. “Everyone tells me to close quickly,” he said, “but I am afraid there is a trap here that I do not see.”

Already in the first meeting it was clear that the deal required a deep review. Behind the documents he presented were many question marks: an outdated zoning plan, conflicting notes regarding building rights, and only general estimates of the expected tax exposure. For the entrepreneur it was an opportunity. For us, it was a responsibility.

We began by diving into the details. We examined the planning history of the plot, previous applications to the local planning committee, and files at the tax authorities. Gradually, the picture became clearer. While building rights did exist, exercising them could trigger a significant betterment levy, and under the original structure of the deal there was also a higher than expected purchase tax liability waiting.

Instead of stopping the transaction, we built a new framework. We changed the method of acquisition, split the stages of implementation, and drafted an agreement that precisely defined the components of the consideration and the allocation of risks. At the same time, we contacted the planning authorities and the tax authorities in order to obtain early certainty and prevent surprises later on.

Days passed, pressure increased, and the seller demanded an answer. When the client returned to us to make a decision, we presented a clear picture: this is the potential, these are the risks, and this is the saving we can achieve if we proceed according to the plan we built. He took a deep breath and said, “I trust you.”

Two months later the transaction was completed. Not only was the plot acquired with full confidence, but the expected tax liability was reduced by hundreds of thousands of shekels, and the building rights were clarified so that the project became truly worthwhile. What initially looked like a gamble turned into a calculated investment.

When the entrepreneur called again, his voice was different. Calm. Confident. “If you had not stopped me in time,” he said, “I would have discovered the mistakes only when it was too late.”

This is exactly where proper planning and smart taxation make the difference, not after problems explode, but just before.

The legal and tax challenge

We were faced with a complex combination of:

Interpretation of the existing zoning plan and plans in preparation.
Review of the property’s history and previous transfers.
Assessment of expected tax exposure under several scenarios.
Building a framework that would allow maximizing rights and reducing tax lawfully.

The challenge was to plan the transaction so that it would be not only legal, but also smart.

The path to resolution: Early planning that prevents surprises

The firm led a comprehensive process that included:

Planning reviews with the local committee, verifying the actual building rights and identifying the possibility of relief that would increase the scope of the project.

Multi scenario tax analysis, calculating purchase tax, future capital gains tax, and betterment levy, and examining alternatives for structuring the transaction such as private purchase versus company, and phased implementation.

Building a customized transaction framework, drafting a purchase agreement that included proper allocation of the consideration components and dedicated clauses for managing tax risks.

Guidance before the tax authorities, handling reports and preliminary applications in order to obtain tax certainty.

The result: A secure deal and significant savings

The process led to a clear outcome:
Clarification of all building rights and expansion of the planned project scope.
Reduction of the expected tax liability by approximately 350,000 shekels compared to the initial structure.
Prevention of exposure to unexpected betterment levy.
Completion of the transaction with full confidence and without delays.

Conclusion

In real estate, the difference between a “good” deal and an “excellent” one lies in the details: early planning, broad tax vision, and legal guidance that understands both the field and the authorities.

This case demonstrates how the combination of smart zoning planning and precise taxation can turn an opportunity into a safe and profitable investment, and save the client significant amounts even before a single brick is laid.