The Single-Apartment Exemption
Israel's Real Estate Taxation Law grants a full capital gains tax exemption to a seller who owns only one residential apartment, has lived in it, and has not used a similar exemption within the past 18 months. This is the primary route for most homeowners to sell without tax.
Conditions and Limitations
- The seller must own only one apartment at the time of sale (fractional ownership counts).
- The 18-month cooling period between consecutive exemptions must be respected.
- The property must have been used as a residential apartment (not commercial or office use).
- Inherited apartments that were never lived in by the heir may face different rules.
Linear Calculation for Partial Exemption
When a seller owned the apartment before January 1, 2014, a special linear calculation (Cheshbon Liniari) applies — part of the gain is exempt and part is taxable, based on the proportion of ownership time before and after that date. This calculation significantly reduces tax for long-held properties.
Can I sell my only apartment in Israel without paying capital gains tax?
Generally yes — if you own only one residential apartment, you are entitled to a full capital gains tax exemption on the sale under Israeli law. However, conditions apply: you must not have used the same exemption within the prior 18 months, and any fractional ownership of another property (even a small share inherited) can disqualify you. Always verify your status before signing a sale agreement.
