Who Is Entitled to a Real Estate Capital Gains Tax (Mas Shevach) Refund?

Real Estate Capital Gains Tax, or Mas Shevach, is a term that runs around the internet a lot – but what does it actually mean?

When selling a property in Israel, you pay tax on the profit generated from the sale. The profit is usually the sale price minus amounts related to the acquisition cost of that property. When the property being sold is real estate (an apartment, land, a shop, etc.) the profit is called "appreciation", or more precisely "real estate appreciation", and part of it is subject to tax. Since 2014, the tax imposed on appreciation is 25%, similar to investments in securities, but this is not always the final amount to be paid, which can be lower. Additionally, there are situations where the tax imposed is particularly high and can reach a maximum percentage of 47% – and despite the fact that a payment voucher is issued for this amount, there are things that can be done to reduce it.

Real estate taxation. Photo: Gil Zohar

When is it reasonable to assume you're entitled to a Mas Shevach refund? 

If the sellers' age is over 60, the probability is quite certain. Even younger residents are entitled to refunds, for example, if the property was held jointly by spouses, the appreciation can be split between them to reduce the tax. Additionally, credits that weren't taken into account can be utilized, losses from various sources can be offset, the appreciation can be spread over several years back while examining additional income in the year of sale and the years preceding it, and more. Often it's also possible to apply a completely different tax calculation when the property being sold is considered "historic" (purchased until 1960) or to utilize discounts that were not claimed when reporting the transaction.

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Tax isn't only paid when selling. When purchasing real estate, you pay acquisition tax or property purchase tax, and there are quite a few tax reliefs that get missed and can save significant amounts. For example: for a married couple where one spouse has an apartment from before the marriage, it's possible to apply reduced acquisition tax for the other spouse (when certain criteria are met). Additional tax reliefs are also given for property transfers between relatives, to those who meet the definition of "disabled," to new immigrants, to those who received a building permit for a residential apartment after the purchase, and more.

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My office specializes in real estate taxation. I invite you to contact me and check the possibility of a capital gains tax and acquisition tax refund.

Click here to read a TheMarker article featuring my office on the topic of real estate taxation (October 2020).