The Knesset in Israel has approved tax refunds to individuals who have purchased an apartment (or have inherited an apartment which was previously purchased) before 1993 and have sold it after January 1st, 2014. This means a full refund of “inflationary capital gains tax”.
What is “inflationary capital gains tax”?
Since January 1st, 2014 whoever owns more than one residential apartment is not entitled to exemption from capital gains tax and will be obligated to pay tax once selling their apartment.
Capital gains tax is composed of two components: nominal capital gains tax and inflationary capital gains tax. The inflationary capital gains tax is the increased value of the apartment as a result of the increase in the consumer price index. The rate of the inflationary capital gains tax was 10% of the increase in the property’s value as a result of the inflation at the period of the ownership of the property (and until 1993).
The Knesset in Israel has approved to cancel the inflationary tax component regarding to individuals who are selling a residential apartment even if it is for investment.
As a result of amending the law, individuals who have sold their apartment and have paid inflationary capital gains tax will be fully refunded. This refund is relevant to all business transactions which were made since January 1st, 2014 and up to the date of the amendment.
Note:
This article provides general and preliminary information only and should not be construed in any event as legal counseling and/or as a substitute for legal counseling in respect of any case and its circumstances.
The above should not be relied upon without consulting with a lawyer in the field before taking any action or making any decision. The above is true as of the date of its composition, and its veracity may change from time to time.
Advocate Tali Kessler is a partner in Rechnitz, Kessler & Co. Law Office & Notary engaged in the field of commercial law, real estate and land taxation.
Distribution and/or duplication and/or photocopying of this document and/or part thereof without permission are prohibited.
The contents of this document should not be construed as counseling and/or as a professional opinion of any kind.
