Inheriting an Apartment in Israel 2026: The Complete Guide for Heirs – Taxes, Division and Sale

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 estate is different, and before making decisions you should consult an attorney who specializes in real estate taxation and inheritance law.

An inherited apartment is usually the largest asset in an estate, and it is also a common source of costly tax mistakes. The good news: Israel has no inheritance tax, and the law gives heirs significant reliefs. The less good news: the reliefs depend on precise conditions and are easy to lose. Here is what you should know.

Stage 1: receiving the apartment

To transfer the apartment into your name, you first need an inheritance order (when there is no will) or a probate order from the Registrar of Inheritance Affairs. The order is then submitted for registration in the Land Registry (Tabu), or with the Israel Land Authority or the housing company, depending on where the apartment is registered.

Is tax paid on receiving the apartment? No. Estate tax was abolished in 1981, and inheritance is not considered a "sale" under the Real Estate Taxation Law. Therefore there is no capital gains tax and no purchase tax upon receiving the apartment.

Stepping into the shoes of the deceased: for tax purposes, your purchase date and purchase price are those of the deceased. If your parents bought the apartment in 1985, that is the date that will count when you sell it. It is therefore worth locating the original purchase contract and documents relating to renovations.

Stage 2: division among the heirs

When there are several heirs, they can sign an estate division agreement – for example, one brother receives the apartment and his sister receives other assets from the estate. A first division of an estate is exempt from tax, on one important condition: the balancing is done only with assets from within the estate.

If one of the heirs pays the others from their own private funds in order to receive the apartment, this becomes a sale transaction between the heirs, with capital gains tax and purchase tax liabilities. This is one of the most common and costly mistakes.

Stage 3: selling the inherited apartment

Selling the apartment is a taxable event. However, in many cases it can be sold with a full exemption from capital gains tax, thanks to Section 49B(5) of the Real Estate Taxation Law (the "deceased's exemption").

The three conditions for the exemption

1. The family relationship: the seller is the spouse of the deceased, a descendant (child, grandchild), or the spouse of a descendant. An inheritance from a brother or an uncle does not meet this condition.
2. Only one apartment: before death, the deceased owned only one residential apartment. The examination here is strict: even a small share in another apartment may negate the exemption.
3. The deceased would have been exempt: had the deceased been alive and sold the apartment, they would have been entitled to an exemption from capital gains tax.

The big advantage: this exemption does not depend on the number of apartments the heir owns, and using it does not "use up" the heir's own exemption on their private apartment.

If the deceased's exemption does not apply, an heir may be able to use their personal single-apartment exemption, or the preferential linear calculation (see our guide to capital gains tax).

The effect of the inheritance on your own apartments

This is where many heirs are surprised. The rule to remember is the half rule:

• If your share in the inherited apartment does not exceed 50%, it is not considered an additional apartment. You will be able to sell your private apartment with an exemption, and buy an apartment at the single-apartment purchase tax rates.
• If your share exceeds 50%, it is considered an apartment in every respect. Buying another apartment will be subject to the second-apartment purchase tax, which is much higher.

Example

Two brothers inherited an apartment in equal shares. Each holds 50%, so each remains the "owner of a single apartment". If, under the division agreement, one of them receives the entire apartment, his situation changes. It is therefore worth planning the division before signing.

Transfer during lifetime or inheritance?

Many parents consider transferring an apartment to their children during their lifetime, as a gift. This is not always preferable from a tax perspective. On a gift, a reduced purchase tax is usually paid, and the recipient may need to wait a certain period before being able to sell with an exemption. On inheritance there is no purchase tax, and the deceased's exemption is available. The decision depends on the family situation and the assets of all parties, and it is worth getting advice before taking any step.

Special cases

• An inherited apartment in an urban renewal project: the Tax Authority has clarified that in certain cases the deceased's exemption also applies to the replacement apartment in Pinui Binui or TAMA 38 (see our guide to Pinui Binui).
• Renting out the inherited apartment: rental income is subject to income tax, unless it is within the exemption ceiling or a reduced tax track is chosen.
• Inherited land or commercial property: the deceased's exemption applies only to residential apartments.

Five common mistakes

1. Balancing payments from private funds in the division of the estate, which turn it into a taxable transaction.
2. Receiving more than half an apartment without calculating the effect on a future apartment purchase.
3. Assuming the deceased's exemption applies without checking whether the deceased had a share in another property.
4. Not locating the deceased's documents, such as the purchase contract and renovation receipts, which reduce the tax if there is no exemption.
5. Transferring an apartment as a gift during lifetime without checking whether inheritance would have been more worthwhile.

The bottom line

An apartment can pass by inheritance in Israel almost tax-free, but only if the division and the sale are planned correctly. A conversation with a real estate tax attorney before signing a division agreement or a sale contract can save hundreds of thousands of shekels.

Disclaimer: The information in this article is general, correct as of the update date, and does not constitute legal or tax advice. Every estate is different, and before making decisions you should consult an attorney who specializes in real estate taxation and inheritance law.

Sources

• Adv. Doron Aharoni, "Selling an inherited apartment: capital gains tax exemption 2026": Link (in Hebrew)

• Adv. Doron Aharoni, "Capital gains tax exemption on the sale of a single apartment 2026": Link (in Hebrew)

• Adv. Naor Gelberg, "Selling an inherited apartment": Link (in Hebrew)

• Adv. Elad Ben, "Real estate taxation on inheritance": Link (in Hebrew)

• Adv. Amit Vered, "Capital gains tax exemption": Link (in Hebrew)

• Nadlan Center, on the inheritance exemption for a replacement apartment: Link (in Hebrew)

• Real Estate Taxation (Appreciation and Purchase) Law, 5723-1963, Sections 4, 5 and 49B(5)