Capital gains tax is a tax imposed by the State of Israel on the profit generated from the sale of real estate. The Israeli Law imposes a tax on the profit generated for sellers as a result of the sale of real estate, so naturally and clearly if there is no profit, no tax is paid.
The Law grants an exemption from capital gains tax to the owner of a single residential apartment, who sold it at a profit, with the exemption limited to a sale amount of 4.5 million NIS (and even more, since the amount is indexed, and as of 2023 exceeds 4.5 million NIS).
In order to be entitled to an exemption from capital gains tax, one must meet a number of conditions stipulated by the Israeli Law, but if all the conditions for the exemption are met, it is possible to receive an exemption from capital gains tax for a single apartment sold by a seller.
The law allows the seller of an apartment to take advantage of the exemption from capital gains tax even if he has an additional residential apartment on top of his only apartment, but only if the additional apartment was purchased as a replacement for the first apartment sold, and if the additional apartment was bought 24 months before the sale of the first apartment. The logic of the law says that if this is a person’s only apartment, and he buys another apartment, usually for living (but not mandatory), then he will have two years to move into the new apartment and sell the old apartment.
The conditions for exemption from capital gains tax on the sale of a single residential apartment are:
The apartment must be the seller’s only residential apartment.
The apartment must have been owned by the seller for at least 18 months before the sale.
The apartment must be sold for a profit.
The profit from the sale must not exceed around 4.5 million NIS.
