Investors trading stocks, bonds, foreign exchange, or investment funds frequently overpay capital gains taxes due to automatic bank withholding (Mas Bamakor) executed on a transaction-by-transaction basis without cross-year capital loss offsetting.

6 Common Reasons Investors are Owed Tax Refunds:

  • Cross-Year Capital Loss Offsetting: Realized losses in one tax year can offset taxable capital gains in subsequent years.
  • Trading via Multiple Banks/Brokers: Banks do not automatically offset losses incurred at Bank A against capital gains realized at Broker B.
  • Foreign Withholding Tax Credits: Dividend tax withheld abroad (e.g., US 25% SEC tax) can be offset against Israeli capital tax liabilities.
  • Marginal Tax Bracket Recalculation for Retirees: Investors over age 60 may apply lower marginal income tax brackets to capital gains instead of standard 25% capital tax.
  • Inflationary Element Deduction: Capital gain portion attributable strictly to CPI inflation is exempt from real capital gains tax.
  • Unused Credit Points: Unutilized personal tax credit points can reduce capital gains tax burdens.

Our firm conducts multi-year capital portfolio tax reconciliations to recover thousands of ILS directly from the Income Tax Authority.