Billionaire Beny Steinmetz challenges $1.4 million tax demand over $9 million Israeli home sale
A dispute over the sale of a luxury Arsuf villa has reached court, with the Tax Authority rejecting Steinmetz’s claim for a lower tax calculation on the property bought nearly three decades ago.
The Tax Authority is demanding capital gains tax of NIS 4.35 million ($1.43 million) from a foreign trust whose beneficiaries are billionaire Beny Steinmetz and his wife Agnes, following the sale of a villa on a 2-dunam (0.5-acre) plot in the town of Arsuf for NIS 27 million ($8.85 million). The demand was detailed in an appeal filed against the Tax Authority’s decision at the Central District Court in Lod over the weekend.
The transaction was completed in November 2024, when the property at 8 Almog Street was sold to the Poleg family for NIS 27 million ($8.85 million). Tamir Poleg is a businessman active in the real estate and technology sectors.
The property was originally purchased in 1995 by a foreign company held by a foreign trust, whose beneficiaries are the Steinmetz couple, with each holding an equal interest. The purchase price was NIS 8.1 million ($2.66 million), while the purchase tax paid at the time was approximately NIS 980,000 ($321,000).
According to an independent appraisal submitted to the Tax Authority, the Steinmetz couple argued that the taxable appreciation on the property, representing the gap between the purchase price and the sale price of approximately NIS 19 million ($6.23 million), should be reduced by various recognized expenses, resulting in a tax liability of only NIS 222,000 ($72,800).
The Tax Authority rejected the claim and is demanding capital gains tax of approximately NIS 4.3 million ($1.41 million).
According to the appeal documents, Steinmetz is seeking, among other deductions, to offset expenses related to the transaction, including brokerage fees, NIS 637,000 ($209,000) paid to Neot Shiran, as well as NIS 236,000 ($77,400) in legal fees.
The appeal was filed at a time when the Steinmetz couple were foreign residents and were considering immigrating to Israel. According to the documents, the trustee who established and held the trust that owned the property was Agnes Steinmetz’s father, Leon Bouaziz, who was also responsible for carrying out the purchase and sale transactions on behalf of the trust.
The couple claim they invested NIS 2.8 million ($918,000) in renovations to the property, where Agnes Steinmetz lived until 2014. After leaving the property, it was never rented out, although the couple’s children stayed there periodically without paying rent.
Through the trustee, the Steinmetz couple requested that the Tax Authority calculate the tax liability using the so-called “optimal linear calculation” method. Under this approach, the taxable appreciation is divided according to different periods of ownership: appreciation accumulated before 2013, which was eligible for tax exemptions under the relevant rules, and appreciation generated from 2014 onward, which is subject to a 25% capital gains tax rate after deducting eligible expenses.
The Tax Authority rejected the request. In its reasoning, it argued that the original 1995 acquisition should be treated as if the foreign company purchased the property on behalf of the Steinmetz couple themselves. Therefore, according to the authority, the later sale in 2024 should also be attributed directly to the beneficiaries.
Based on this interpretation, the Tax Authority determined that the Steinmetz couple are not entitled to the optimal linear calculation and instead should be subject to a corporate tax framework. The dispute will now be decided by the Central District Court in Lod.
