Israel’s Tax Authority in Legal Dispute With Legendary Singer Ishai Ribo

JERUSALEM (VINnews) — Israel’s Tax Authority is engaged in a dispute with the legendary singer Ishai Ribo–and the legal conflict is creating a firestorm which could have massive repercussions on hundreds of real estate investors in Israel.

The dispute is currently in the Jerusalem District Court, with Ribo caught in the crosshairs of the Tax Authority, due to three luxury apartments he recently purchased in the JERUSALEM SPIRIT project.

As reported by the Jerusalem post, there is a reduced real estate purchase tax for commercial investments, as opposed to the higher tax rate for residential properties. Ribo’s argument is that he clearly bought the three apartments with plans to rent them to tourists, and furthermore, the entire purpose and design of the complex is clearly intended to target short-term renters.

According to Court magazine, the project offers residents an array of luxurious facilities, including a pool, gym, sauna, and a mikvah. The units are intended for tourism and recreation, and attract a lot of attention from investors.

Ishay Ribo stated that he intends to rent them to short-term tourists and therefore requested a reduced purchase tax of 6%. Ribo insists this is a business purchase to generate income from tourism and not for a private household.

But the Tax Authority says that bottom line, these are residential apartments, and therefore are subject to a higher tax rate of 8%.

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

At the Jerusalem District Court, Judge Avigdor Dorot tried to bring the parties to an agreement in order to avoid court proceedings, but it does not seem likely that will happen.

The next hearing is scheduled for November. The outcome could impact the rules of the game in the field of real estate taxation and affect hundreds of buyers and investors in Israeli real estate.

Ribo claims that the definition of “residential apartment” is not accurate, and emphasized that the complex, located in a tourist area, is specially adapted for tourist needs and temporary use.