We Can Reduce Your Israeli Capital Gains Tax to Zero or 7%.
The Aharoni law firm has extensive experience with the recent amendment to the Israeli capital gains tax law for nonresidents. We are able to reduce or even completely eliminate the capital gains tax for non-residents of Israel. We have successfully minimized the capital gains tax to zero for non-owners of an apartment in a foreign domicile. Our experienced team of tax lawyers have also demonstrated success in aggressively reducing the tax to 7-10% in most cases if you are a nonresident of Israel and you do own a property in your domicile.
The Israeli capital gains tax you will pay under the new tax law will ultimately depend on several parameters, including but not limited to apartment rights, length of the rental period if any, whether or not the apartment is occupied or empty, size of the apartment, and other variables.
As the U.S. or any foreign resident who owns or has inherited an apartment in Israel and also owns another residential property in their domicile, recent tax amendments by the Israeli tax authorities could affect you. These changes are aimed at increasing the supply of apartments for Israeli residents, at the expense of foreign residents, by abolishing significant tax benefits.
One of the most prominent measures in the amendment is to cancel the exemption from the capital gains tax, which by law can be up to 25% tax imposed on the increase in the value of the apartment from the date of its purchase until the day of its sale, for anyone who is not a resident of Israel who owns another residential property, selling the apartment. This means that any non-resident, including heirs, who sells an apartment in Israel will no longer be entitled to a full exemption from the capital gains tax.
Tax Laws in Israel
The cancellation of the exemption of capital gains tax for foreign residents who owns another apartment in their domicile requires careful planning to aggressively reduce the tax in Israel.
The amendment also denies a non-resident entitlement to the Better Linear Tax Reduction, which means that a non-Israeli resident selling a home in Israel acquired before 2014 would be required to pay Land Appreciation Tax spanning the entire period in which the gain accrued. Additionally, a non-Israeli resident would be required to pay Land Appreciation tax under the Old Linear Tax rules.
Finally, the Bill denies the rental exemption to a non-Israeli resident. According to the current law, if a person rents out one or more homes in Israel and the total monthly rent does not exceed NIS 5,654 (in 2024), that person may be exempt from Israeli income tax thereon.
The Recent Tax Amendments and Their Impact on Foreigner Apartment Owners in Israel
The original tax exemption was introduced in the 1990s when large numbers of immigrants from countries in the former Soviet Union began arriving in Israel. The new tax break continues to encourage rentals in place of empty apartments. Still, the favorable tax treatment also incentivizes bricks-and-mortar property investments, which in turn takes homes out of the market as primary residences and drives up prices.
Is Length of Ownership Relevant When It Comes to The Amendment?
Homeowners who have owned their apartments for a long time can benefit from lower taxes.
How is the Profit Calculated?
The difference between the sale price and your original purchase price is adjusted for any approved improvements made to the property.
The Aharoni Law Firm has years of experience with the amendment in the capital gains tax law. We know how to reduce or even eliminate the capital gains tax for non-residents of Israel. We have successfully minimized the tax to zero for non-owners of an apartment in a foreign domicile like the U.S. Our experienced team of tax lawyers has also successfully reduced the tax to 7% in most cases if you are a nonresident of Israel and own a property in your domicile (residency).
