.Taxes When Selling an Apartment in Israel

A sale of Israeli real estate must be reported to the Israel Tax Authority even when the seller believes that an exemption applies. Reviewing the tax position before signature helps estimate the seller’s net proceeds, identify a possible exemption or relief, collect evidence of deductible expenses and prepare a payment schedule that takes account of the required tax and municipal certificates.

The tax review should be completed as part of the legal preparation for selling an apartment in Israel and before making a binding commitment to a buyer.

What is Israeli real-estate capital gains tax

Capital gains tax is imposed on the gain arising from the sale of a right in Israeli real estate. In general terms, the gain is calculated by comparing the sale value with the adjusted acquisition value, after applying the deductions and adjustments permitted by law. The result may be affected by the acquisition date, method of acquisition, ownership history, depreciation, building rights, exemptions and transitional provisions.

Not every sale of a residential apartment is exempt. Eligibility depends on the statutory conditions, the seller and family unit, other residential rights, use of the property and the timing of previous transactions.

Exemption for a qualifying residential apartment

Israeli law provides exemptions and reliefs in defined circumstances, including a route relating to a sole qualifying residential apartment. The review may include whether the property satisfies the statutory definition, whether it is the family unit’s sole apartment, the ownership period, previous sales and partial interests in other homes.

If the consideration reflects unused building rights, part of the sale price may remain taxable even where the residential element qualifies for an exemption. Inherited apartments are subject to specific conditions, and inheritance by itself does not establish an exemption.

Foreign-resident sellers

A foreign-resident seller requires particular review. Eligibility for an exemption may depend, among other matters, on evidence that the seller does not own a residential apartment in the country of residence. The required documents and the ability to obtain an appropriate confirmation should be considered before the contract is signed.

Expenses that may be deductible

Where a sale is taxable, expenses connected with acquiring, improving and selling the property may reduce the taxable gain, subject to the statute and supporting documentation. Depending on the circumstances, possible deductions may include:

The acquisition price and qualifying acquisition expenses.
Purchase tax paid on acquisition.
Legal and brokerage fees relating to the purchase and sale.
Qualifying capital improvements, as distinct from routine maintenance.
Valuation, surveying or planning expenses connected with the property.
Betterment levy and other qualifying payments.
Certain financing expenses, subject to the statutory requirements.
An expense is not deductible merely because it relates generally to the apartment. The legal conditions, connection to the transaction and supporting invoices must be examined.

Linear calculation and taxable sales

A preferential linear calculation may be relevant to certain residential apartments acquired during particular periods. It allocates the real gain between periods under the statutory rules. It is not available in every case. Unused building rights, business use, depreciation and complex ownership can materially affect the calculation.

Advance payment on account of the seller’s tax

In a taxable transaction, the buyer may be required to transfer part of the consideration to the Tax Authority as an advance payment on account of the seller’s capital gains tax. The rate and timing depend on the statutory circumstances. In appropriate cases, the seller may apply to reduce the advance. The contract should coordinate the advance, payments to the seller and the issue of the registration certificate.

For the buyer’s related obligations, see taxes when buying an apartment in Israel.

Municipal betterment levy

Capital gains tax is a state tax. A betterment levy is imposed by the local planning authority in connection with planning improvements such as an approved plan, variance or non-conforming use. The existence of potential building rights does not by itself establish the final amount. A valuation and objection or appeal procedure may sometimes be required.

A municipal certificate is generally required to register the buyer’s rights. Municipal debts, betterment levy exposure and planning issues should therefore be checked early to avoid delaying completion.

Reporting within 30 days

Both parties must report the transaction within 30 days. The seller’s declaration includes the transaction and property details, a self-assessment of the capital gains tax or an exemption claim, and supporting documents. Late reporting may result in penalties and delay the tax certificates.

See the Tax Authority’s official declaration service and its information on online reporting.

Checks before offering the apartment for sale

Obtain a current Land Registry extract or confirmation of rights.
Collect the original acquisition agreement, tax returns and invoices.
Check any mortgage and obtain an updated repayment figure.
Review building rights, irregularities and possible betterment levy.
Calculate capital gains tax under the relevant scenarios.
Consider the timing if a replacement home will be purchased.

An official Land Registry extract can be obtained through the Ministry of Justice.

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Updated September 28, 2026.