When you inherit Israeli property, you do not get a fresh tax cost equal to the value at the date of death. As a general rule Israel gives no step-up in basis at death, which means the heir inherits the deceased's original acquisition cost, and a later sale can trigger Israeli capital gains tax (known as mas shevach) measured from the price the deceased originally paid, not from the value when you received the asset. That single rule, combined with the Israeli intestacy regime that decides who inherits when there is no will, is the common point of failure in estates that include Israeli real property, whether the heirs are resident in Israel or have a connection to another country. Maya Ziv Law works through both questions for every client, the Israeli resident inheriting a family apartment and the relative abroad inheriting from afar alike, and the sections below explain the worst case, the reliefs that often soften it, and exactly how an estate is divided when the deceased left no valid will.
The No Step-Up Basis Rule
In many common-law systems, an heir's tax cost in inherited property is reset to its market value at the date of death. Israel does not work that way. There is no step-up. The heir steps into the deceased's shoes and carries forward the deceased's original purchase price as the cost base. When the heir later sells, the taxable gain is measured from what the deceased paid, which can span decades of appreciation.
One exception to establish first. Section 26(a)(1) of the Land Taxation Law provides that where the deceased died before 1 April 1981, the acquisition value is the value of the right at the date of death. In those older estates there is in effect a step-up, so the date of death is the first fact to check before assuming any exposure.
For individuals, real estate capital gains tax (mas shevach) is charged at 25% on the real, inflation-adjusted gain after deductible expenses (2026 rate). That rate carries two qualifications. The 25% applies to the real gain, not the nominal gain, and 25% is not an absolute ceiling. Under section 121B of the Income Tax Ordinance an individual whose taxable income exceeds NIS 721,560 (the figure set for tax years 2024 to 2027) pays a 3% surtax (mas yasaf) on the excess, with a further 2% on taxable income from capital sources, in force from tax year 2025. On the sale of a residential apartment the gain counts toward that base only where the sale value exceeds NIS 5,385,285 (2026 rate) and the sale is not exempt, so an exempt sale, or one valued below that threshold, carries no surtax on the gain at all.
Why This Is Presented as a Worst Case
The carryover-basis rule sounds alarming, and on a long-held property the headline exposure can be large. In practice, three features routinely reduce or even eliminate the bill, which is why the firm frames the 25% figure as a worst case rather than a forecast.
One point to be clear about for clients who are not Israeli tax residents. A non-resident seller is not excluded from the single-residence exemption. Section 49A(a) expressly names a foreign resident who has no dwelling in the country where they are resident, and creates a presumption that such a seller does have one there. The presumption is displaced by a certificate from that country's tax authority confirming they own no dwelling in it, and once it is produced their eligibility is assessed like any other seller's. This is an evidential condition to prepare for in advance, not a substantive bar. Separately from the exemption, where a qualifying residential apartment was acquired before 1 January 2014, the real gain accrued up to that date is exempt and only the balance is taxable. That relief applies by operation of law where its conditions are met, but it is confined to a qualifying residential apartment and does not extend to land or commercial property, so the first question is whether the asset meets the definition. The same considerations shape any purchase, which is why they run through the firm's guide for foreign buyers of Israeli real estate.
Who Inherits When There Is No Will
If the deceased left no valid will, and where Israeli law governs the succession, the estate is divided under the intestacy rules of the Israeli Succession Law 5725-1965. The first question is therefore when Israeli law governs. For Israeli immovable property such as an apartment, this matters even for a foreign-domiciled owner, because section 136 gives an Israeli court jurisdiction over the estate of anyone who left assets in Israel. Which law governs the succession is set by section 137 according to the deceased's domicile at death, not by where the asset sits, though section 142 provides that where the foreign law refers back to Israeli law that reference is accepted and Israeli internal law applies. Either way, transferring the rights in an Israeli apartment still requires an Israeli succession order. A foreign will alone does not move the title.
The Surviving Spouse's Share Under Section 11
The division set out below applies where Israeli law is the governing law, whether through the deceased's domicile or through the renvoi in section 142. On that footing, section 11 of the Succession Law gives the surviving spouse a defined position. First, and before any division, the spouse takes the movable property of the joint household, which by custom and circumstance typically includes the household car. After that, the spouse takes a fraction of the rest of the estate, and the size of that fraction depends on which other relatives survive.
The Matrimonial Home Enhancement, a Proviso Inside the Two Thirds Tier Only
The proviso in section 11(a)(2) operates only within the second tier, that is where no children, their descendants, or parents survive, and there are siblings, their descendants, or grandparents. Where that tier applies, and the spouse was married to the deceased for three years or more immediately before the death and was living with them at that time in a dwelling forming part of the estate, the spouse takes the deceased's entire share in that dwelling plus two thirds of the remainder. The proviso does not apply automatically. The three year marriage and cohabitation requirement must be met, and the home must form part of the estate. More importantly, where the deceased left children, their descendants, or parents, the proviso does not apply at all, and the spouse takes one half of the residue only, with no enhancement in the dwelling.
Summary of Intestacy Shares
Note that no inheritance tax or estate tax is due in Israel on what passes through this division. Israel abolished estate and inheritance duty effective 1 April 1981, and the position holds regardless of the citizenship or residency of the deceased or the heirs. The tax exposure on an inherited Israeli property is the capital gains tax discussed above, and it only arises on a later sale, not on the inheritance itself.
Foreign Documents, Apostille, and Hebrew Translation
An estate with foreign elements almost always involves documents created abroad, such as a foreign will, a death certificate, or a grant of probate. To use these in Israeli succession proceedings, two formalities generally apply.
A practical point worth knowing. Section 67A(a)(7) of the Succession Law provides that where the succession is governed by Chapter Seven of the Law, its private international law chapter, the Registrar of Inheritance Affairs transfers the application to the court. An estate whose deceased was domiciled abroad falls within that chapter, so the right assumption when planning is the court route rather than an application that ends at the registry.
Cross-Border Documents Checklist
How the Firm Approaches an Inherited Israeli Property
Work on a cross-border estate runs on two tracks at once. On the succession side, the firm secures the Israeli succession order, identifies the heirs under Section 11, and registers the property correctly in the heirs' names. On the tax side, the firm maps the carryover cost base early, gathers the documents that reduce a future gain, and tests whether any exemption or the linear calculation is available, so that a future sale is planned rather than improvised. Doing both together is what keeps the carryover cost base from producing an unplanned tax charge on a later sale, and it sits at the heart of estate planning for international families where one Israeli apartment can drive the whole succession.
A note for clients who also have a United States connection. The figures above are Israeli rules. United States citizens, including dual nationals, are taxed by the United States on their worldwide estate, and a US-person heir who receives more than $100,000 from a foreign estate must generally file IRS Form 3520 even though the inheritance itself is not US-taxed. Those are United States Internal Revenue Service rules, not Israeli law, and you should consult a qualified US tax advisor on them.
This article is general information and not legal advice. Whether you are an heir resident in Israel or an heir with a connection to another country, and whether the matter is personal or commercial, contact Maya Ziv Law for advice on your specific estate.
Last reviewed July 2026.
Frequently Asked Questions
Do I pay Israeli inheritance tax when I inherit an apartment in Israel
No. Israel abolished inheritance and estate tax effective 1 April 1981, and there is no inheritance tax regardless of the citizenship or residency of the deceased or the heir. The tax to watch for is capital gains tax (mas shevach), and it only arises if and when you later sell, not on the inheritance itself.
What does no step-up in basis actually cost me
It means that on a future sale your taxable gain is measured from what the deceased originally paid, not from the value when you inherited. For individuals the rate is 25% on the real, inflation-adjusted gain (2026 rate), and a surtax can apply on top for high earners. Inflation indexation, deductible costs, and a possible single-residence exemption often reduce or eliminate this, so the 25% figure is a worst case rather than a prediction.
Who inherits my Israeli property if I die without a will
The estate is divided under Section 11 of the Succession Law. The surviving spouse takes the joint-household movables and typically the household car before any division, plus one-half of the rest where children, descendants or parents survive, two-thirds where only siblings, their descendants or grandparents survive, and the entire estate where none of those survive. Within the second tier only, and not where children, their descendants, or parents survive, the section 11(a)(2) proviso gives the spouse the deceased's entire share in a dwelling forming part of the estate plus two-thirds of the remainder, provided they were married for at least three years and were living together in that dwelling at the time.
Will my foreign will transfer my Israeli apartment on its own
Generally no. The need for an Israeli order does not come from a rule of the law of the place where the asset sits. It comes from the jurisdiction in section 136 of the Succession Law, which reaches anyone who left assets in Israel, and from the requirements of registration in the Land Register. Which substantive law governs the succession is set by section 137 according to the deceased's domicile, and in many cases Israeli law is reached through the renvoi in section 142. Either way, transferring the rights in the apartment requires an Israeli succession or probate order, and a foreign will, death certificate or grant must carry an apostille and a certified Hebrew translation to be used in the Israeli proceeding. Coordinating an Israeli will with foreign arrangements is covered in the firm's note on cross-border estate planning for families with assets in more than one country.
Can a non-resident seller still avoid the capital gains tax
A non-resident is not excluded from the exemption. Section 49A(a) creates a presumption that they own a dwelling in their country of residence, and that presumption is displaced by a certificate from that country's tax authority confirming they do not. Once the certificate is produced their eligibility is assessed like any other seller's, so it is worth establishing early whether the certificate can be obtained. In addition, where a qualifying residential apartment was acquired before 1 January 2014, the real gain accrued up to that date is exempt and only the balance is taxable. That relief is confined to a qualifying residential apartment and does not extend to land or commercial property.
About the Author
Adv. Maya Ziv is the founder of Maya Ziv Law. She brings a finance-forward background to Israeli real estate, estate, and commercial work, with a degree from Baruch College and experience at Citi and Vornado, and is a member of the Israel Bar. She advises private individuals and businesses, Israeli residents and clients abroad alike, on Israeli property, succession, and cross-border matters.
Sources
Primary Israeli legislation underlying this article.