How the improvement levy is calculateed
- Buying an apartment in Israel
- Improvement Levy
Calculate the value of the property after the improvement; at the beginning of the plan, and from this amount reduce the value of the property in its previous state.
Then deduct the increased value in the free market not as a result of the plan. Meaning according to the plan that was valid before the new plan, and the result obtained is the ‘improvement’.
As we know, we Israelis try to get a chicken for the price of an egg, so I will emphasize that we deduct the component of the increase in value of the property due to the program promoted in the planning and construction institutions that can improve the value of the property.
In the words of the court: “The objective data affecting the market value of the property on the eve of the approval of the improvement plan, the price increase caused by the existing expectations in the market as a result of the planning procedures must be excluded.”
It follows that five factors must be defined in order to reach a worth of an ‘improvement’, of which 50% constitutes the improvement levy: the previous plan, the value of the land before the improvement, the new plan and its new value, and the date of approval of the new plan.