When Do You Pay Capital Gains Tax and When Are You Exempt
The answer depends on whether this is your sole property, when you purchased it, and the sale price.
The sole property exemption applies automatically when the apartment is your only property.
- Sole property – full exemption up to 5,008,000 NIS
- Second property – 25% tax plus up to 5% surtax
- Inherited property – special exemption under Section 49B(5)
- Gift transfer – tax deferral under Section 62
- Luxury property above ceiling – partial exemption
The Dramatic Changes in 2026
The Linear Benefit Calculation was one of the most significant tax advantages for pre-2014 property owners.
Under the Arrangements Law, it will be gradually phased out.
The surtax was significantly expanded.
- 2026: 5% tax on previously exempt gains
- 2027: increases to 10%
- 2028: 15%
- 2029: 20%
- 2030: full elimination at 25%
Deductible Expenses
Section 39 allows sellers to deduct various expenses.
The most common mistake is not keeping receipts.
- Purchase tax
- Renovation costs with receipts
- Attorney fees
- Brokerage fees up to 2%
- Betterment levy
- Real mortgage interest
- Registration fees
- Property appraisal costs
Smart Tax Planning for Gush Dan Sellers
Advance tax planning can save hundreds of thousands of shekels.
Couples who own two properties can transfer ownership between them.
- No-consideration transfer to family
- Splitting ownership between spouses
- Timing sales before 2030
- Inheritance planning
- Using the one-third rule