When you inherit Israeli property, you do not get a fresh tax cost equal to the value at the date of death. Israel has 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 where most estates run into trouble. 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 Trap
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 all the way back to what the deceased paid, which can be decades of appreciation.
For individuals, real estate capital gains tax (mas shevach) is charged at 25% on the real, inflation-adjusted gain after deductible expenses (2026 rate). It is important to read that sentence carefully. The 25% applies to the real gain, not the nominal gain, and a high earner can face an additional surtax (mas yasaf) on top, so 25% is not an absolute ceiling.
Why This Is the 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 important caveat for clients who are not Israeli tax residents. A foreign (non-resident) seller is generally not eligible for the single-residence exemption even with only one Israeli home. For property bought before 1 January 2014, a non-resident may instead be able to use the linear (mutav) calculation, which taxes only the appreciation accruing after 2014, though this is conditional and not automatic. Whether you can rely on it depends on the facts, so confirm eligibility before you assume relief. The same capital gains and mas shevach mechanics also 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, the estate is divided under the intestacy rules of the Israeli Succession Law 5725-1965. For Israeli immovable property such as an apartment, this matters even for a foreign-domiciled owner, because under the Succession Law choice-of-law rules Israeli real estate follows Israeli law (lex situs). The deceased's last-domicile law may govern movable property, but the apartment in Israel is distributed under Israeli succession rules and still requires an Israeli succession order. A foreign will alone does not move the title.
The Surviving Spouse's Share Under Section 11
Section 11 of the Succession Law gives the surviving spouse a defined position. First, off the top, 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
The Section 11 proviso adds a significant uplift in one specific situation. Where the spouse was married to and living together with the deceased for at least three years immediately before death, in a dwelling that forms part of the estate, the spouse takes the deceased's entire share in that dwelling, plus two-thirds of the remainder of the estate. This is conditional, not automatic. The three-year cohabitation requirement must be met, and the home must be part of the estate. Where it applies, it can shift the bulk of a family apartment to the surviving spouse.
Intestacy Share Table
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. A 2023 amendment to the Succession Law broadened the authority of the Registrar of Inheritance Affairs to handle a wider range of cases without automatic referral to the Family Court, including cases where the deceased was domiciled abroad. The Registrar may still refer genuinely complex matters to court, but the path for a straightforward cross-border estate has become more direct.
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 no step-up trap from becoming an expensive surprise, 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 Israeli resident sorting out a parent's apartment or an heir abroad with a connection to Israel, contact Maya Ziv Law for advice on your specific estate.
Last reviewed June 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 off the top, 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. A separate proviso can give the spouse the deceased's whole share of the family home plus two-thirds of the remainder after three years of living together.
Will my foreign will transfer my Israeli apartment on its own?
Generally no. Israeli immovable property follows Israeli law (lex situs), so an Israeli apartment is dealt with under Israeli succession rules and needs an Israeli succession or probate order. A foreign will, death certificate or grant must also 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 generally not eligible for the single-residence exemption even with only one Israeli home. For property bought before 1 January 2014, a non-resident may be able to use the linear (mutav) calculation, which taxes only the appreciation after 2014, though this is conditional and should be confirmed on the facts before you rely on it.
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 before being admitted to 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.