The Tax Authority vs Ishay Ribo: Three luxury apartments in the crosshairs

His heart is torn in two: a legal conflict currently underway in the Jerusalem District Court is stirring up the world of real estate in Israel, with one of the country's favorite singers, Ishay Ribo, caught in the crosshairs of the Tax Authority. At the heart of the issue are three luxury apartments recently purchased by Ribo in the JERUSALEM SPIRIT project, with a total value of NIS 6.5 million. 

According to the Court magazine, which published the article first, the project, located in the heart of the magical city, offers its residents a variety of luxurious facilities, including a pool, gym, sauna, and even a mikveh. The luxury apartments, intended for tourism and recreation, attract a lot of attention from investors. Indeed, Ishay Ribo, who recently purchased three apartments in the project, stated that he intends to rent them to short-term tourists and therefore requested a reduced purchase tax of 6%. 

Ribo, who paid a total of NIS 6,513,443 for the three apartments, with each purchased for approximately NIS 2.15 million, insists that this is a business purchase intended to generate income from tourism and not for managing a private household. 

But the Tax Authority does not accept this argument. It says that these are residential apartments for all intents and purposes, and therefore the purchase must be subject to a purchase tax at a higher rate of 8%. They argue that the purchase of the apartments as fixed assets and not as business inventory does not exclude the apartments from the definition of "residential apartment."

Now, the court must decide whether the apartments were purchased for business or private purposes.

Ribo insists on his righteousness and fails to reach an agreement

At the Jerusalem District Court, where the case is heard, the hearing is being conducted in the presence of Judge Avigdor Dorot. At the beginning of the hearing, the judge tried to bring the parties to an agreement outside of the protocol, but it does not seem likely that this will happen. 

The ongoing trial is expected to continue for some time, with the next hearing scheduled for November 2024. The decision could change the rules of the game in the field of real estate taxation and affect hundreds of buyers and investors in the Israeli real estate market. 

Ribo claims that the definition of "residential apartment" does not comply with his business goals and planned use of the properties, emphasizing that the luxury complex, located in a tourist area, is specially adapted for tourist needs and temporary use, which includes all these luxurious facilities.