Real estate taxation in 2026 – what has changed and what is important to know?
Real Estate Taxation Law (שבח ורכישה), תשכ”ג-1963 Applies to all real estate transactions in Israel, including Real estate transactions in Jerusalem, a city characterized by a unique, complex real estate market with particularly significant financial volumes.
Why does the law apply to all real estate transactions?
חוק מיסוי מקרקעין נועד למסות רווחים הנובעים ממכירת זכויות במקרקעין בישראל, והוא חל על כלל עסקאות הנדל”ן: דירות מגורים, בתים פרטיים, נכסים מסחריים, מגרשים חקלאיים, מחסנים, מלונות ועוד.
This is a law. territorial, and therefore every transaction in Israel is subject to it – regardless of the identity of the parties.
Financial implications and transaction complexity
Since real estate transactions often involve significant financial volume, The tax implications could reach hundreds of thousands or even millions of shekels.. Hence the critical importance of early tax planning.
Real Estate Tax Planning – Why It’s Critical?
Early planning stages
In real estate taxation, the rule is:
End of action with forethought.
Already in the early stages of the transaction, the following should be examined:
Identity of the seller and buyer
Number of properties they own
Date of purchase of the property
How the rights were obtained (purchase, inheritance, gift)
The nature of the property and its use
Impact of changes in legislation
The real estate taxation system in Israel is complex, dynamic, and frequently updated through legislation, executive orders, and case law – and any such change could dramatically affect tax liability.
Real Estate Appreciation Tax in Jerusalem – 2026
What is real estate appreciation tax?
Real estate appreciation tax is a tax imposed on Capital gain Created from the sale of real estate or shares in a real estate association.
The tax is calculated as the difference between the selling price and the purchase price, less recognized expenses.
Expenses recognized for calculating the appreciation
Purchase expenses
Renovation and improvement costs
Purchase tax
Fees and taxes
שכר טרחת עו”ד
Brokerage fee
Interest and financing expenses
After offsetting expenses and indexing – we get Net gain.
Appreciation tax rate
The appreciation tax rate is 25% from net appreciation
There are exemptions and reliefs, mainly with regard to residential apartments.
Capital Gains Tax Reform and Impacts 2026
Previously, one apartment could be sold every 4 years with a full exemption.
Since Amendment 76 (2014), the exemptions have been reduced and the calculation has become Linear and complex.
Exemption for a single residential apartment
Conditional on possession of At least 18 months
Subject to the value ceiling set by law
Linear appreciation tax
Applies to purchased properties Before 1.1.2014:
The proportional portion until 31.12.2013 – exempt
The portion from January 1, 2014 until the sale – No. 25%
Purchase tax – mandatory for the buyer
Purchase tax rates 2026
Purchase tax on transactions Real estate in Jerusalem constitutes a significant component of ownership the overall transaction, especially in the purchase of residential apartments in sought-after areas of the city.
Purchase tax is imposed on the purchaser of rights to real estate and constitutes an additional payment in addition to the price of the property.
The tax rate varies depending on:
For the property type
The number of apartments owned by the buyer
For the status of the buyer (single / additional apartment)
- Single apartment: up to 1,978,745 ₪ – 0%, 1,978,745–2,347,040 ₪ – 3.5%, 2,347,040–6,055,070 ₪ – 5%, 6,055,070–20,183,565 ₪ – 8%, over 20,183,565 ₪ – 10%
Additional apartment: up to 6,055,070 NIS – 8%, above – 10%
Facilitation for new immigrants
Immigrants are entitled to special tax benefits for a period of up to 7 years from the date of immigration.
Gift transactions between relatives
When is the perfect gift deal?
Unlike a regular gift, a gift of real estate is perfect. Only with registration of rights At the Land Registry Office.
Until then, it is a commitment to a gift, from which it is sometimes possible to withdraw.
Tax benefits in a gift transaction
Tax exemption for gifts between relatives
Close to the matter of appreciation tax: spouse, parent, grandparent, descendant, spouses of descendants, brother/sister (within limitations)
The recipient of the gift steps into the shoes of the gift giver regarding capital gains tax upon future sale.
Purchase tax on a gift transaction
Reduced liability: 1/3 of the regular purchase tax
Transfer between spouses in a shared apartment – full exemption
Improvement levy and gift transactions
Free transfer between relatives It is not considered an exercise of rights. And it does not create an immediate charge for the improvement levy – but rather postpones it to a future date of realization by the recipient of the gift.
Selling an apartment received as a gift – routes
Full exemption – Subject to cooling-off periods and single apartment conditions
Linear Beneficiary Tax – Depending on the date of purchase and waiting
Full charge of appreciation tax – When the conditions for the exemption or benefit are not met
Each path has different consequences, and sometimes even for the gift giver himself.
Summary
The importance of professional guidance
Real estate taxation is not a technical question – but Strategic move.
Wrong decisions can be costly, while proper planning can save huge amounts of money.
לפני כל עסקת נדל”ן – מכירה, רכישה או מתנה – מומלץ לפנות לייעוץ משפטי המתמחה במיסוי מקרקעין, על מנת לבחון את מלוא ההיבטים: קנייניים, מיסויים ותכנוניים.
In view of the great complexity of Real estate taxation in Jerusalem, and the long-term tax implications, it is recommended to consult A lawyer who is knowledgeable in real estate law and real estate taxation in the city of Jerusalem, already in the early stages of the deal.
Contact us For an initial, no-obligation consultation – we will be happy to assist you.
* The above does not constitute a recommendation or advice, and advice should be examined and received for each individual case and should not be relied upon in the article.
Lawyer in Jerusalem Real Estate Taxation
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