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Israel Grants Capital Gains Tax Exemption on Inherited Homes Up to 5 Million Shekels
In Israel, heirs selling an inherited home can be exempt from capital gains tax up to 5,008,000 shekels in 2026 if they are the testator's spouse, descendant, or spouse of a descendant, and if the testator owned only one home at death.
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What happened
- 01Heirs can be exempt from capital gains tax on inherited homes up to 5,008,000 shekels in 2026.
- 02Exemption applies only if heir is spouse, descendant, or spouse of descendant of the deceased owner.
- 03The deceased must have owned only one residential property at death for exemption eligibility.
- 04Tax Authority tests if the deceased would have owed tax to prevent greater benefits for heirs.
- 05Partial ownership of additional properties by the deceased disqualifies heirs from exemption.
- 06Exemption applications require wills, probate, or inheritance certificates submitted with sale declaration.
The tax authority applies a fairness test comparing the heir's exemption to what the testator would have received. Applications require legal documents, and exemptions may apply in urban renewal cases. Israel has no inheritance tax, but capital gains tax may apply on inherited property sales.
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