Tax Exemption When Selling Your Primary Residence (705)

In Israel, selling property is usually accompanied by a capital gains tax obligation (מס שבח).
However, there is an important exception: selling your primary residence can be fully or partially exempt from this tax.
Understanding the exemption rules allows sellers to save significant amounts and avoid errors when calculating taxes.

Who Is Eligible for Exemption

Full exemption from מס שבח applies if:

• The sale concerns your primary residence in Israel
• The seller has owned the property for at least four years (according to current rules)
• The exemption has not been used for another property sale in the past four years

Partial exemption is possible if the sale is linked to purchasing a new home for personal use.

Key Conditions for Exemption

1. Primary Residence
   • The property must be registered as the seller’s main place of residence.
2. Ownership Period
   • The minimum ownership period is considered to confirm eligibility for exemption.
3. Moving to a New Property
   • Partial exemption may apply if the sale price of the old property exceeds the cost of the new property.
4. Required Documents
   • Proof of property ownership
   • Proof that it was your only residence
   • Purchase and sale dates

How the Exemption Is Calculated

• Full exemption: no capital gains tax is charged.
• Partial exemption: tax is applied only to the amount exceeding the cost of the new property.

An attorney or accountant reviews all documents to calculate the tax correctly and confirm the exemption.

Common Seller Mistakes

1. Incorrect accounting of previous sales
   • If the exemption was used in the last four years for another property, full exemption is lost.
2. Lack of proof of residence
   • Confirming that the property was your primary residence is critical.
3. Ignoring purchase and sale periods
   • Failing to observe ownership periods can result in tax being applied to the full profit.

Tips from Unehasim

We recommend preparing documents before listing your property.
Our specialists can help:

• Verify whether your apartment qualifies for exemption
• Gather all necessary documents for your attorney
• Calculate the tax in advance to plan the sale without surprises

Preparation ensures peace of mind and confidence in the transaction.

Contact Unehasim Specialists

If you are planning to sell your primary residence in Haifa and want to do so with maximum benefit and no tax surprises, Unehasim specialists can help:

• Confirm your eligibility for exemption
• Prepare all documents correctly
• Calculate the tax and develop a sales strategy

Selling your apartment with proper preparation for tax exemption ensures a safe, transparent, and profitable transaction.