Updated: October 2026 · e-land editorial team
Disclaimer: The information in this article is general, correct as of the update date, and does not constitute legal or tax advice. Every transaction is different, and before making decisions you should consult an attorney who specializes in real estate taxation or a tax advisor.
You sold an apartment, signed the contract, and suddenly everyone is talking to you about "mas shevach" (capital gains tax on real estate). How much is it? Do you even have to pay? And how is it that your neighbor sold a similar apartment and didn't pay a shekel? In this guide we sort things out, without legal jargon, so that you come to your next transaction prepared.
What exactly is mas shevach?
Mas shevach is a tax on the profit from selling real property (an apartment, land, a shop and so on), not on the entire sale price. If you bought an apartment for a certain amount and sold it for more, the difference is called "shevach" (appreciation), and the State levies tax on it.
The good news: not all of the difference is considered profit. Your expenses and the effect of inflation are deducted from it, and in many cases there is a full exemption.
How is it calculated? Four simple steps
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Sale price minus purchase price – this is the gross gain.
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Deduct recognized expenses – for example attorney's fees, brokerage fees, purchase tax you paid when you bought, and investments that improved the property (a substantial renovation, an extension).
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Neutralize inflation – the part of the profit that results only from the rise in the consumer price index is not taxed. What remains is the "real gain".
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Calculate the tax – the basic rate in 2026 is 25% of the real gain. In particularly old properties (purchased before November 2001), the part of the profit attributed to the earlier period may be taxed at different rates, and there it is especially worth getting professional help.
An illustrative example
Dana bought an investment apartment in 2016 for ILS 1,500,000 and sold it in 2026 for ILS 2,300,000. Assume that her recognized expenses (attorney, brokerage, purchase tax) totaled ILS 60,000, and that the inflationary component was about ILS 200,000.
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Gross gain: ILS 800,000
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Less expenses: ILS 60,000
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Less inflation: ILS 200,000
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Real gain: ILS 540,000 → tax of about ILS 135,000
The figures are for illustration only. In practice, the Tax Authority calculates the inflation component according to the index on the exact dates.
The big exemption: selling a single residential apartment
This is the exemption that saves most Israelis from the tax. A seller of a single residential apartment is exempt from mas shevach if all of the following conditions are met:
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The apartment is their only residential apartment.
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They have owned it for at least 18 months.
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They did not sell another apartment with an exemption in the 18 months preceding the sale.
The exemption ceiling: the full exemption applies to an apartment worth up to ILS 5,008,000. The ceiling has been frozen for 2024–2027 and is not updated according to the index. For a more expensive apartment, the proportional part of the gain above the ceiling is taxable.
Important for couples: for mas shevach purposes, spouses are considered a single unit. An apartment registered in the name of only one of them may also be considered the other's apartment.
The preferential linear calculation: a benefit for owners of older apartments
Until 2014, it was possible to sell an apartment with a full exemption in almost every situation. When the rules changed, the legislature created a transitional mechanism called the "preferential linear calculation": a person selling an apartment that is not exempt (for example a second apartment) that was purchased before January 1, 2014 divides the profit by time.
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The part of the profit attributed to the period up to the end of 2013 – exempt.
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The part attributed to the period from 2014 onward – taxed at 25%.
For example, someone who held an apartment for about 20 years, about 10 of them before 2014, will enjoy an exemption on about half of the gain.
What about the intention to abolish the benefit?
In early 2024, a draft bill was published proposing to abolish it gradually. According to professional sources published during 2026, the general benefit still applies, but an amendment was enacted that narrows it in a specific case (see the next section). Since this is a changing area, we recommend checking the current position before any sale.
Note: owners of vacant land purchased before 2014
In the past, someone who bought a vacant plot before 2014, built a house on it years later and sold it, enjoyed the linear calculation for the entire period, including the years in which the land stood vacant. The amendment to the law closes this loophole. The benefit will be denied if all three conditions are met together:
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The land was purchased before January 1, 2014, and purchase tax was paid on it as land (not as an apartment).
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On June 1, 2023, no residential apartment was built on it.
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Construction of the apartment is not completed by December 31, 2030.
The message to owners of older land is clear: those who plan to build should start now. Permit and construction processes take years, and "completion of construction" is usually measured by Form 4 (occupancy permit) or connection to infrastructure, not by completion of the frame.
Timetables: when to report and when to pay
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Reporting: the transaction must be reported to the Tax Authority within 30 days of signing, even if a full exemption is requested. Usually the attorney files the declaration on your behalf.
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Payment: the tax must be paid within 60 days of signing.
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Deferral of payment: payment can be deferred as long as the apartment has not been handed over to the buyer, the buyer has not paid more than 40% of the price, and no irrevocable power of attorney has been given to transfer ownership. Once any of these changes, the tax must be paid. Note: linkage differentials and interest accrue on the deferred period.
Inheritance and mas shevach – in brief
Receiving an apartment by inheritance is not a taxable event. However, when the heir sells it, tax may be payable unless the heir meets special exemption conditions for heirs. As a rule, the heir "steps into the shoes" of the deceased, meaning that the purchase date and purchase price are those of the parent. We cover this in a separate article.
Five common mistakes that cost money
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"Using up" an exemption on a transaction with no profit. If there is no gain, there is usually no point in claiming an exemption, as using the exemption may block an exemption on the next sale.
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Not keeping receipts. Without documents for renovations, brokerage and fees, it is difficult to deduct the expenses.
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Forgetting that spouses are one unit. An apartment in your spouse's name may cancel the exemption.
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Signing delivery and payment dates without thinking about the tax. The terms in the contract determine when you will have to pay.
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Assuming that old land is always "protected". See the amendment regarding construction completed after 2030.
The bottom line
Most sellers of a single apartment will not pay mas shevach at all, and those selling a second apartment or land can significantly reduce the tax with proper planning. The key is to check the situation before signing the contract, not after.
Disclaimer: The information in this article is general, correct as of the update date, and does not constitute legal or tax advice. Every transaction is different, and before making decisions you should consult an attorney who specializes in real estate taxation or a tax advisor.
Sources
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Bizportal, "Selling an apartment? How to know if mas shevach will affect you" (July 2026): Link (in Hebrew)
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Adv. Doron Aharoni, "Abolition of the preferential linear calculation in mas shevach from 2030": Link (in Hebrew)
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Kol Zchut, "Deferral of mas shevach payment": Link (in Hebrew)
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Nadlan Center, "Mas shevach – the complete guide for 2026": Link (in Hebrew)
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Calcalist, on the draft bill for the gradual abolition of the linear calculation (2024): Link (in Hebrew)
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Real Estate Taxation (Appreciation and Purchase) Law, 5723-1963
