Tama 38 vs. Pinui Binui Identifying value and risk in these two options

Ramat Eshkol, Jerusalem. 4th of September, 2025

I have fond memories of a poignant discussion I had with an at the time well-known real estate agent in Jerusalem: she was adamant that Tama 38 would never happen in Ramat Eshkol.  2 days later Capital Gold broke ground on their flagship Tama 38 project, and the rest is history, as they say.

The Jerusalem Real Estate market, ostensibly more than other markets, is full of a spectrum of nay-sayers and Pollyanna-type characters who will both adamantly share their views about what the future holds for חתחדשות עירונית – Tama 38. Some will guarantee you incredible profits and huge future successes, while others will promise you with certainty that the whole system will collapse and not even be around in another year.  The real question that needs to be asked is, do either of these groups really know what they are talking about or is it merely speculative?

The nuts & bolts of Tama 38 in relation to pinui binui

First of all, I think there is a crucial difference between Tama 38 and Pinui Binui that needs to be emphasized. Tama 38\1, building earthquake strengthening projects, are unique in that the skeleton of the original building is left in place, and 2.5 floors are added on top of the building.  To strengthen the building and structurally support the additional floors,  a cement shell is added to the entire building, which strengthens the building’s foundation. The shell also gives each existing tenant an additional 25 meters on the inside of the building. 

a structural point of view, I’ve noted over the years that many expert building engineers are challenged to effectively design a successful structural plan in Tama 38/1 : working around an existing building structure and supporting the new floors is not easy while creating a beautiful attractive new building!. But this is a blog for another day…. Today, we are here to discuss an important tax consideration which I believe very few buyers are aware of, even those who are specifically looking for these types of deals.

Pinui Binui is a totally different process structurally to Tama.  As opposed to our structural challenge in  Tama 38/1 to keep the building looking good and in one overall flowy piece, pinui binui : it involves the complete destruction of the existing building and replacing it with a new tower or set of towers. Now let’s test our readers with a challenging question: what is the legal status of the apartment from the time the developer destroys it until it is rebuilt? If you have a mortgage on a property in this building, or you have some type of secondary lien.  If the building stops for a year and you want to sell your property and get rid of the mortgage, can you????  What do you own in the interim?  

The answer to this question is complicated, but edifying.  As an established Jerusalem real estate lawyer explained to us a few days ago, in pinui binui the builder/development group actually buys your property rights  from you and sells those rights back to you after the new property is built.  Therefore, there is essentially a tax event taking place when you get your new property and you might have to pay an additional tax on the increased value in your property at that point!  This should be carefully looked into with an expert tax advisor, because when it comes to Israeli tax exposure, there are certain rules and principles which can be estimated accurately at the time of purchase.

Media Properties

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Media Properties

Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Quis ipsum suspendisse ultrices gravida.