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Israel's Capital Gains Tax Law
When a person sells an apartment that was rented in Israel, he or she is required to pay capital gains tax.
This tax is calculated on the basis of the difference between the sale price and the initial purchase price.
However, it is important to note that property owners must also take depreciation into account when calculating capital gains, provided the property is/was rented out.
Depreciation is the annual deduction from the acquisition value of a property. In Israel, depreciation is deducted from the capital gain when the apartment is sold. This means that owners are required to pay taxes on the value of the depreciation in addition to the capital gain.
ALSO READ: Preventive asset declaration in Israel
Retroactive tax audit for 7 years
It is important to note that the Israeli tax authorities carry out retroactive checks on property sales over the past seven years.
The hunt is on for owners in Israel.
This means that owners who have sold their apartment in the last seven years may be subject to a tax investigation if they have not correctly declared their capital gains.
If you own a rented apartment in Israel and are considering selling it, it's important to consult a tax advisor to determine how to correctly calculate your capital gains taxes.
Keeping your tax file up to date
In addition, owners should be aware that tax authorities may carry out retroactive checks on property sales, so it's important to keep accurate records to protect yourself in the event of a tax investigation.
ALSO READ: DEPRECIATION TO BE DEDUCTED TO DETERMINE CAPITAL GAINS... EVEN IF EXEMPT (!)
How much does the capital gain cost?
It's important to understand that Israel's real estate capital gains tax is a significant tax for owners who sell their rented apartment. Therefore, it is essential to know the details of this tax and be prepared to pay it before selling the apartment.
Owners should also bear in mind that the real estate market in Israel is constantly changing. Prices can rise or fall rapidly, which can have an impact on the amount of capital gains tax owners have to pay.
It is therefore important to keep an eye on real estate market trends and to consult a tax advisor regularly to ensure that the sale of the apartment is carried out in the most tax-efficient way.
Watch out!
Even if you pay by 10% package.
You'll also need to take into account any depreciation you "might have requested".
Making your declaration according to the rules
What's more, homeowners should be aware that the Israeli tax authorities can be very strict when it comes to declaring capital gains tax.
If an owner fails to declare or pay capital gains tax correctly, he or she may be subject to a tax investigation.
In this case, it is essential to have accurate records to protect against any tax investigation.
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Optimize before you sell
In short, if you own a rented apartment in Israel and are considering selling it, it's important to take the time to understand the tax implications of selling real estate.
It is advisable to consult a tax advisor to ensure that the sale of the apartment is carried out in the most tax-efficient way, and to keep accurate records to protect yourself in the event of a tax investigation.
In a nutshell:
In Israel, owners who sell a rented apartment must pay capital gains tax, which is calculated on the basis of the difference between the sale price and the initial purchase price, including depreciation.
Tax authorities carry out retroactive audits on real estate sales over the past seven years, so it's important to know consult a tax advisor and keep accurate records to protect themselves in the event of a tax investigation.
Your questions - our advice
- I sold my property a year after I bought it. What do I risk?
- Does this law apply to gifts of apartments between relatives?
- Is this law retroactive?
- How can I be sure that my lawyer has correctly declared the capital gain?
- Does a donated apartment count as an apartment in its own right?
- I only have one apartment! Does this law apply to me?
