Updated: October 2026 · e-land editorial team
Disclaimer: The information in this article is general, correct as of the update date, and does not constitute legal or appraisal advice. Every case is different, and before making decisions you should consult an attorney who specializes in planning and building or a real estate appraiser.
The municipality approved a new plan in the neighborhood, and suddenly you are allowed to build another floor, extend your apartment, or your agricultural land has become residential land. Great news, but it comes with a partner: the local planning and building committee. This partnership is called the "betterment levy" (heitel hashbacha). In this guide we explain what it is, how much it costs, when it is paid, who is exempt, and how to reduce the amount.
What is the betterment levy?
The betterment levy is a payment to the local planning and building committee (not to the Tax Authority) when a planning decision has increased the value of your property. It is imposed on the owner of the property or on a long-term lessee.
Three types of decisions create a liability
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Approval of a plan (zoning plan / taba) – for example additional building rights, or rezoning of agricultural land for residential use.
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A relief (hakla) – approval to deviate from the existing plan, for example an additional floor or balconies.
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Non-conforming use – a permit to use the property other than according to its designation, for example an office in a residential apartment.
Sometimes a property located outside the boundaries of the plan can also be charged the levy, if it is proven that the plan increased its value. Plans approved before July 1, 1975 do not give rise to the levy.
How much do you pay?
The rate set by law is 50% of the increase in value (the "betterment"). An appraiser on behalf of the committee compares the value of the property just before the plan was approved with its value immediately afterwards.
An illustrative example
An apartment in an old building was worth ILS 1,800,000. A plan was approved allowing each apartment to be extended by an additional room, and the appraiser estimated that the value rose to ILS 2,100,000.
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Betterment: ILS 300,000
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Betterment levy (50%): ILS 150,000
The figures are for illustration only.
Important to know: since a reform that came into force in May 2022, local authorities may set a different levy rate for certain projects, mainly in urban renewal. Therefore, in such projects it is worth checking the rate set in your city.
When do you pay? The "realization event"
The liability arises on the day the plan is approved, but payment is required only when you "realize" the betterment:
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An application for a building permit – if you build according to the new rights, the committee will demand payment before granting the permit. Those who realize only part of the rights pay only for the part realized.
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Sale of the property – to register the apartment in the Land Registry in the buyer's name, a certificate from the municipality that there are no debts is required, and at this stage the committee checks which betterment plans have been approved since you acquired the property.
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Actual commencement of use – according to the relief or the non-conforming use.
The trap
Linkage – the levy is calculated as of the date the plan was approved, and from that day it is linked to the consumer price index. If many years have passed between the approval of the plan and the sale, the amount may grow significantly.
Exemptions: who does not pay?
The law provides several exemptions. The main ones:
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Extension of a residential apartment up to 140 sqm – in the construction or extension of a residential apartment, no levy is charged on a total area of up to 140 sqm, provided that the owner or a relative lives in it. A sale within four years of completion of construction cancels the exemption, and the levy then becomes payable.
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Safe room (mamad) – construction of a protected space in the minimum required area.
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Accessibility adjustments – for a person with a disability.
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Neighborhoods under rehabilitation – properties in neighborhoods declared neighborhood rehabilitation areas.
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Urban renewal – TAMA 38 and Pinui Binui projects enjoy exemptions and reliefs, so that the projects are economically viable.
Each exemption has precise conditions. Before assuming that you are exempt, it is worth checking with a professional.
Received a payment demand? Don't pay blindly
The committee's assessment is determined by its own appraiser, so it is worth reviewing it. There are two ways to appeal, depending on the type of dispute:
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A dispute over the amount – apply to a deciding appraiser (shamai machria), a neutral appraiser appointed by the Ministry of Justice.
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A dispute over the liability itself (for example, "the plan did not increase the value of the property at all" or "I am entitled to an exemption") – file an appeal with the district appeals committee.
The clock is ticking: you have 45 days from receipt of the assessment to appeal. Those who miss the deadline lose the right. Decisions of the deciding appraiser and the appeals committee can be appealed further, also within short timetables.
In practice, appeals often end with a significant reduction. A private real estate appraiser on your behalf is usually the most worthwhile investment at this stage.
Betterment levy vs. capital gains tax: what's the difference?
| Betterment levy | Capital gains tax (mas shevach) | |
|---|---|---|
| Paid to | The local committee | The Tax Authority |
| On what | Increase in value from a planning decision | The profit on sale |
| Basic rate | 50% of the betterment | 25% of the real gain |
| When | On a permit, sale or use | On sale |
Both may be paid on a single sale. The levy paid is usually recognized as an expense in calculating capital gains tax.
Tips for land investors
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Check plans before buying. Ask the local committee for information on plans that have been approved or are in the pipeline, to know what liability may arise.
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Set out in the contract who pays. By law the obligation falls on whoever was the owner when the plan was approved, but the contract can provide otherwise. Unclear wording is a recipe for dispute.
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Rezoned agricultural land is the classic case of a high levy, because the jump in value is large. Include the levy in the calculation of the expected profit.
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Keep documents, including previous assessments and payments you have made.
The bottom line
The betterment levy is one of the highest charges in real estate, but it is not set in stone. Those who check plans in advance, know the exemptions and act in time when the assessment arrives can save significant amounts.
Disclaimer: The information in this article is general, correct as of the update date, and does not constitute legal or appraisal advice. Every case is different, and before making decisions you should consult an attorney who specializes in planning and building or a real estate appraiser.
Sources
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Kol Zchut, "Betterment levy": Link (in Hebrew)
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Kol Zchut, "Objecting to a betterment levy": Link (in Hebrew)
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Bizportal, "Betterment levy: who must pay, how to get an exemption and how to reduce the assessment" (July 2026): Link (in Hebrew)
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Dira U'Mashkanta guides (Hon), on the 2022 reform of the levy rate: Link (in Hebrew)
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Nadlan Center, "Betterment levy – the complete guide for 2026": Link (in Hebrew)
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Planning and Building Law, 5725-1965, Third Schedule
