Chayei Sara 5786 – Location, Location, Location

In real estate they say only three things matter: location, location, location.

Avraham needs a place to bury his beloved wife Sarah, and he is set on Maaras HaMachpelah as the appropriate spot. He goes about negotiating the purchase of the plot from the Bnei Cheis, and specifically Efron.

The key point of contention is the pricing of the plot. The Ramban (23:9) points out that Efron was unaware that there was any burial plot in the cave—let alone the two people fashioned by G-d Himself, Adam and Chava.

The Or HaChaim adds that had Efron known this, there is no way he would have sold the cave for that amount of money. How then could Avraham have “underpaid” Efron when buying the cave?

The Or HaChaim answers that this is why Avraham specifically asked Efron to give him the cave as a gift. That way he could claim that the gift was, by definition, given irrespective of the money that exchanged hands. The value of land can never be truly evaluated. As the Gemara teaches us, there is no principle of overcharging (ona’ah) in land transactions. (It is a debate amongst the Poskim as to the parameters of this statement.) Some explain this is due to the idiosyncratic nature of real estate—no two properties are exactly alike. Others explain this is due to the subjective nature of property: one person dreams of buying a home next to the biggest shul in town, another couldn’t think of anything worse.

Land valuation is a major issue in taxation policy. In Israel the authorities tax both the buyer via Mas Rechisha and the seller with capital gains. For taxation to work there has to be a “fair value” test for the transaction. What’s stopping Reuven from buying a dira from Shimon for “2,000,000 NIS” and “gifting” another 300,000 NIS? Yet the authorities struggle to define what fair value should have been.

A recent audit revealed major flaws in the government’s systems for assessing the value of real estate transactions. The government has two different databases that record land ownership and transactions. (G-d knows why we need two databases for the same thing!) Needless to say, the two databases don’t line up with one another. Over 450,000 apartments are reported as being in buildings with zero floors. And don’t forget the over 900,000 apartments that simply don’t exist in the Tax Authority’s records.

The Tax Authority’s response to the audit: “Our data is based on the self-declarations made by taxpayers reporting whatever they want to report… you have to appreciate we don’t check every case… even those we do check, we don’t check all the details.”

As a public service, I’d like to give the Tax Authorities a helping hand by officially reporting a sale/purchase:

Location: Maaras HaMachpelah
Buyer: Avraham
Seller: Efron
Price: 400 NIS
Floors: Two
Date: 2,085 from creation

For any cave-related or other financial issues you require assistance with, please reach out at [email protected].

Good Shabbos.