Capital Gains Tax

Many families have accumulated multiple residential properties over their lifetimes. Some of these properties were inherited, while others were purchased as long-term investments, providing both ongoing rental income and capital appreciation. In some cases, properties were acquired as a retirement strategy—assets that generate income to support the owners in their later years. As parents age, the question arises: How can they minimize tax liabilities when transferring properties to their children? In Israel, the transfer of properties through inheritance is exempt from taxes. However, this is not the case when children later sell the inherited properties.

When selling a real estate property in Israel, it is crucial to understand the type of property being sold and its associated tax implications. Specifically, there are significant differences between selling a plot and selling an apartment in terms of eligibility for capital gains tax (CGT) exemptions or reduced linear tax calculations. This article outlines these differences and offers tax planning recommendations to prepare for the sale.

When selling a property in Israel, a key question is the amount of capital gains tax (Mas Shevach) the seller will be required to pay. Many are unaware that mortgage interest expenses paid over the years are deductible expenses for calculating capital gains tax and can significantly reduce the tax amount.

Capital gains tax is levied on the profit generated from the sale of a property, after deducting deductible expenses incurred during its purchase and improvement. If the seller has not retained all receipts and invoices for expenses incurred during construction or renovation, problems may arise. It is possible to engage an experienced real estate appraiser to provide a professional evaluation of the property’s original construction costs for the purpose of CGT calculation.

Preliminary inspections before making a decision to sell a second-hand apartment Before setting off there are some tests that are very important to do even before

Preliminary inspections before making a decision to sell a second-hand apartment Before setting off there are some tests that are very important to do even before

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