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How to calculate the capital gain on the sale of an apartment in Israel?
If you own an apartment that you have rented out under the exemption scheme (below the monthly threshold), you are required to deduct a depreciation allowance from the acquisition value at the time of sale. However, it is important to note that the Supreme Court has not yet ruled on the issue in the current case, which underlines the importance of consulting a tax advisor before making a decision to sell. In short, obliging the seller to deduct depreciation increases the capital gain and the associated tax. This is mandatory for any apartment rented out in Israel, regardless of the tax regime applied to the declaration of rental income: 1. Taxation at 10%. 2. Actual flat-rate taxation. 3. Taxation under the exemption system. It is therefore important to be informed and advised before making any decision to sell. READ ALSO: BUYING AN APARTMENT IN ISRAEL WITH A FRENCH SCIThe Israeli Supreme Court has yet to rule
When you plan to sell an apartment rented under the exemption scheme, you must take into account the depreciation allowance on the acquisition value, which must be deducted to determine the taxable capital gain. This deduction is common practice and approved by law in certain situations, as confirmed by the court ruling in the Reshef Chen case. However, it is important to note that the Supreme Court has not yet ruled on the actual question, which underlines the importance of consulting a tax advisor before making a sale decision. Indeed, tax rules can vary depending on the situation, and it is crucial to ensure that all tax obligations are met for the transaction to be carried out legally. Tip Filing an annual tax return allows you to considerably reduce your tax liability on rental income, and can also lower your capital gains tax.How to optimize capital gains tax in Israel?
It's also worth noting that each case is unique, so it's advisable to consult a tax advisor for personalized advice. Your tax advisor will be able to inform you about the various options available to minimize your tax burden and help you make an informed decision.Do you have a question? Contact us SEE ALSO: PROPERTY DEPRECIATION IN ISRAEL: BREAKING DOWN THE PURCHASE PRICE
Depreciation is key
In short, if you are planning to sell an apartment rented under the exemption system, it is important to take into account the deduction of the depreciation allowance from the acquisition value when determining the taxable capital gain.
It is advisable to consult a tax advisor for personalized advice and to ensure that all tax obligations are met before making a decision to sell.
In a nutshell: When selling an apartment rented under the exemption systemIn the case of a purchase, it is compulsory to deduct a depreciation allowance from the acquisition value. This practice is approved by law in certain situations, but it is not compulsory. important to consult a tax advisor before making a sales decision.
