The Jezreel Valley, with its agricultural landscapes and rural communities, is a sought-after area for residence and agriculture. If you own a farm and are interested in subdividing it—whether for family reasons, development, or sale—it is important to understand the complex process involved. In this article, we will explain in a simple and professional way the main steps, the tax brackets, and the correct way to proceed.
What is an estate?
A farm is a plot of agricultural land owned or leased long-term from the Israel Land Authority (ILA), intended primarily for agriculture and single-family residence. Splitting a farm involves dividing a single plot into two or more separate units, with different uses (e.g., residential, tourism, or sale).
Why split an estate?
Selling part of the land for economic realization.
Division between heirs as part of an inheritance.
Changing the land use (for example: drawing boundaries or business development).
Stages of dividing the estate
Verification of rights and lease agreements
Make sure the property is registered in the land registry and on the lease deed.
Check whether the lease agreement with the RMI allows for splitting. In some cases, special approval is required.
Municipal planning and approvals
Building/split permit: Contact the local planning and building committee to obtain a split permit.
Change of zoning: If you wish to change the zoning of the land (for example: from agricultural to residential), you must submit an appropriate urban development plan (urban planning).
Agricultural opinion: Sometimes approval from the Ministry of Agriculture is required that the split will not harm agricultural activity.
Land surveying
Hire a certified surveyor who will prepare a detailed plan for dividing the area, in accordance with the requirements of the Regional Planning Authority and the local committee.
Israel Land Authority (ILA) approval
Submit the approved plan to the RMI Divisions Subcommittee. The process may take several months.
Registration in the Land Registry
After receiving the approvals, register the new plots in the land registry under the updated owners' names.
Taxation in the Splitting of an Estate: The Main Steps
Dividing an estate involves significant tax liabilities. Here are the main ones:
Improvement levy
A tax paid to the local authority due to the increase in the value of the land following the approval of the subdivision or change of zoning. The amount of the levy is determined by the difference between the value of the land before and after approval.
Capital Gains Tax (Capital Gains Tax)
If the estate is sold after the split, the seller will pay a tax of up to 25% on the profit from the sale (the difference between the purchase price and the selling price).
Purchase tax
The buyer will pay purchase tax according to the value of the purchased plot (tax rates up to 8%).
VAT
If the split is done within a business framework (e.g. entrepreneurship), a VAT of 17% may be charged.
The right way to do a split
Professional escort
Hire a lawyer who specializes in real estate law and a tax advisor who specializes in agricultural real estate.
Consult a planning consultant to understand the potential of the land after the split.
Early tax planning
Avoid tax planning “after the fact.” For example, splitting as part of an inheritance may save capital gains tax compared to splitting before a sale.
Coordination of expectations with the RMI
Some estates are located in areas with strict development restrictions. Verify the lease terms before investing in planning.
Common challenges and how to avoid them
Bureaucratic delays: Start the process with an organized work plan and familiarity with the RMI requirements.
Tax surprises: A detailed tax assessment is required before the split is made.
Neighborly objections: If the split affects neighbors, negotiate in advance.
Summary
Dividing a land plot in the Jezreel Valley is a complex process that requires legal, planning, and financial knowledge. However, if done correctly, the process can maximize the value of the land and open up new opportunities.
It is recommended to contact us for personal advice and professional guidance at every stage — Melior Zehavi Emek Real Estate.
The information in this article does not constitute legal or tax advice. Each procedure should be tailored to the specific circumstances of each estate.
