Heirs Can Claim Significant Capital Gains Tax Refunds on Inherited Property Sales

When heirs sell inherited property and pay capital gains tax, each heir can individually request a refund based on their personal tax rights, resulting in varying refund amounts among heirs. Often, heirs pay the tax directly or through their attorney managing the trust account. Each heir’s refund claim is evaluated separately according to their unique tax entitlements.

Additionally, capital gains tax refunds can be requested for property sales made by the deceased owners themselves within the last six years before their passing. Refunds in these cases tend to be larger because the deceased often had more tax benefits due to their age and generally lower taxable income compared to heirs.

A recent example involved a family whose parents sold a property in 2021, paying 268,000 shekels in capital gains tax before passing away in 2022. The heirs filed a refund claim and are expected to receive approximately 220,000 shekels plus interest and linkage increments. The attorney involved was surprised to learn that refunds can be claimed even after the original taxpayers have died, as these rights transfer to heirs.

Many people do not claim capital gains tax refunds because they do not understand their eligibility, although most qualify for substantial amounts. Unlike regular tax refunds based on deductible actions, capital gains tax refunds depend on personal tax calculations related to the law. Any capital gains tax paid since 2020 is worth reviewing for potential refunds.

The article encourages anyone who has paid capital gains tax on inherited property sales to check their eligibility for refunds, highlighting that significant sums can be recovered by heirs or original sellers within the statutory period.