Question 1

When am I exempt from capital gains tax (mas shevach) on selling an apartment in Israel?

Accepted Answer

The most common exemption (ptur shevach) applies to the sale of a single residential apartment owned and used as your primary residence: you must have owned it for at least 18 months, it must be the only residential apartment you own, and you must not have used this exemption in the previous 18 months. If all conditions are met, the full gain is exempt.

Question 2

What if I own more than one apartment?

Accepted Answer

If you own more than one residential apartment, you cannot claim the standard single-apartment exemption. You may be able to claim a partial exemption based on the period during which the property was used as a primary residence. Tax planning before the sale — ideally 12–18 months in advance — can significantly affect your liability.

Question 3

Does the exemption apply to inherited apartments?

Accepted Answer

Yes, in most cases. An heir who sells an inherited apartment can claim the exemption if the original owner would have been entitled to it — i.e., if the apartment was the deceased's single primary residence. However, if the heir already owns another apartment, the conditions for exemption become more complex.

Question 4

What is the linear reduction method (shitatit)?

Accepted Answer

For sellers who do not qualify for a full exemption, the linear reduction method allows partial exemption based on the proportion of the holding period before and after 2014 (when the new tax regime took effect). For older properties held before 2014, a significant portion of the gain may be exempt.

Question 5

When must I pay capital gains tax if no exemption applies?

Accepted Answer

Capital gains tax (mas shevach) on real estate in Israel is generally charged at 25% for individuals on gains since 2014, with the pre-2014 portion taxed at marginal income tax rates or under the linear method. The tax is declared and paid within 30 days of the sale agreement.

Question 6

Can I get a second opinion before signing a sale agreement?

Accepted Answer

Yes — and it is strongly advisable to obtain tax advice before signing. Once the agreement is signed, the tax event has occurred and planning options are limited. Adv. Elmaliach advises sellers on their tax position before signing, including the timing and structuring of transactions to minimise liability.

Capital Gains Tax Exemption on Apartment Sale in Israel

Single Apartment Exemption

Tax Planning Before the Sale

Frequently Asked Questions

Thinking of Selling an Apartment?