No Inheritance Tax
Israel abolished inheritance tax in 1981. Receiving an inheritance is not a taxable event – regardless of the amount or the relationship to the deceased. This applies to all asset types: cash, real estate, securities, business interests, and personal property. The heir receives assets tax-free.
Future Tax on Sale
While receiving an inheritance is tax-free, selling inherited assets triggers capital gains or betterment tax. The gain is calculated from the deceased's original cost basis ('stepping into shoes'). This means the heir may face significant tax when selling inherited assets that were held for decades by the deceased.
Example
Heir receives an apartment inherited from a parent who purchased it in 1990 for ₪200,000. Current value: ₪2,500,000.
At inheritance: ₪0 tax
If sold for ₪2,500,000: Gain = ₪2,300,000. After preferred linear calculation (pre-2014 portion exempt), the tax could be ₪200,000–₪300,000 depending on the calculation.
If the apartment is the heir's only residence, the full single-apartment exemption may eliminate the tax entirely.
Important Note: The information on this website is for general informational purposes only and does not constitute professional tax advice. Consult a qualified tax advisor before making financial decisions.