Question: Do I have to pay taxes when gifting property to my child (or other family member) in Israel?

There is no separate “gift tax” in Israel, but real estate transfers to family can trigger reduced versions of the usual property taxes. The gifter (giver) is generally exempt from Israeli capital gains tax if the donation is to a close family member. The recipient (receiver) must pay a third of the normal purchase tax based on the property value.

For example, if the normal purchase tax would be NIS 90,000, the donee (receiver) in a family gift pays NIS 30,000. If the recipient is an Israeli resident with no other home, the tax is often 0 (because one-third of a 0% first-home rate is also 0).

Within the immediate family, the Israeli tax cost is minimal compared to the cost of a sale. Always file the proper forms and get Tax Authority approval first. And remember, the recipient will inherit the original cost basis – if they sell later, they’ll owe tax on the total gain since the property was initially acquired.

Learn more details on our latest guide: How to Gift Property, Land, or Apartments in Israel to Family Members

What about U.S. taxes – do I owe anything to the IRS for gifting my Israeli property?

If you’re a U.S. person giving the gift, you won’t owe income tax on the transfer itself, but you must file a gift tax return (Form 709) if the value is above the annual exclusion (which it will be, for any real estate). You likely won’t owe actual gift tax due to the multi-million-dollar lifetime exemption (approximately $14 million in 2025), but filing is still required.

If you’re receiving the property and you’re a U.S. person, you must file Form 3520 to report receiving a foreign gift if its value exceeds $100,000. Neither the gift-giver nor receiver will pay U.S. income tax on the transfer itself. However, the original cost basis also carries over for the U.S. recipient, meaning potential U.S. capital gains tax will be due when they eventually sell the property. Please consult with our firm in these situations to ensure compliance with all IRS requirements.

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