Real estate transactions in Israel involve complex taxation rules under the Land Taxation Law (*Mas Shevach u'Mas Rechisha*). Proper tax planning before buying or selling property saves tens of thousands of Shekels.

1. What is Real Estate Appreciation Tax (Mas Shevach)?

Mas Shevach is a capital gains tax levied at a base rate of 25% on net real capital gains generated from selling real estate assets.

2. How to Reduce Mas Shevach? 3 Essential Tools:

1. Recognized Expense Deductions – Keep Every Receipt!

The net taxable capital gain is reduced by deducting all valid property costs: renovation expenses, attorney fees, CPA audit fees, real estate broker commissions, appraisal fees, and mortgage interest.

2. Real Estate Tax Spreading (Priasat Mas) – The Strongest Savings Tool

Sellers may apply for retroactive tax spreading over up to 4 tax years, taking advantage of lower marginal income tax brackets and unutilized credit points.

3. Single Qualifying Residential Property Exemption

Full tax exemption is granted on the sale of a single qualifying residential apartment owned for at least 18 months, subject to statutory price caps.

Annual linear depreciation deduction rate of 2% significantly reduces taxable capital appreciation.