Question 1

Does Israel have an inheritance tax?

Accepted Answer

No. Israel abolished its inheritance tax in 1981. There is no estate duty or inheritance tax on assets received from a deceased person, whether as a beneficiary under a will or as a statutory heir. This applies to both residents and non-residents inheriting Israeli assets.

Question 2

Are there any taxes on receiving an inheritance in Israel?

Accepted Answer

While there is no inheritance tax as such, taxes may arise in specific situations: (1) capital gains tax when inherited property is subsequently sold — though the inherited cost basis and various exemptions apply; (2) betterment levy (hitkum hashbacha) when inherited land is developed or subdivided; (3) purchase tax in some circumstances on assets received outside the standard estate distribution.

Question 3

What happens when inherited property is sold?

Accepted Answer

When an heir sells inherited real estate, capital gains tax (mas shevach) may apply on the appreciation in value. The calculation uses the deceased's original acquisition price as the cost basis, adjusted for improvements and inflation. Various exemptions may reduce or eliminate the liability — particularly if the heir uses the single-apartment exemption. Tax advice before selling inherited property is strongly recommended.

Question 4

Does inheriting a property abroad trigger Israeli tax?

Accepted Answer

Israeli residents who inherit assets abroad are generally not taxed in Israel on the inheritance itself. However, rental income from foreign property and capital gains on its eventual sale are taxable in Israel for Israeli residents. The interaction of Israeli and foreign tax rules requires professional advice where international assets are involved.

Question 5

What taxes did the deceased need to pay on their estate?

Accepted Answer

The estate itself may have outstanding tax liabilities — income tax, VAT, betterment levy — which must be settled before the estate is distributed. These are debts of the estate, not of the heirs. Adv. Elmaliach reviews the tax position of an estate as part of the administration process.

Question 6

Can an heir waive their inheritance to avoid tax consequences?

Accepted Answer

An heir can waive (renounce) their inheritance — and the waived share passes as if the renouncing heir had predeceased. A waiver cannot be used to direct the inheritance to a specific person other than those who would otherwise inherit. Tax considerations may influence the decision to waive, but the waiver is irrevocable once made.

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