Betterment tax calculation examples

Example 1: a simple calculation, an apartment bought after 2014

An investment apartment bought in 2016 and sold in 2026, with no exemption. The whole real gain is taxed at 25%, and the estimated tax is 64,175 NIS.

What the example shows: tax is charged only on the real gain, that is, the increase in value above inflation. Deductions, including the purchase tax paid, are linked to the index from the payment date and reduce the gain. An apartment bought from 1.1.2014 is not eligible for the preferential linear method, so the whole real gain is taxed at 25%.

Example 2: the preferential linear method, an apartment bought before 2014

A second residential apartment bought in 2004 and sold in 2026. The part of the real gain that accrued up to 31.12.2013 is exempt, and the estimated tax falls to 171,715 NIS, compared with 280,776 NIS under the regular linear method.

What the example shows: the real gain is apportioned by days. The part attributed to the period up to the end of 2013 is exempt, provided the apartment is a qualifying residential apartment. The preferential method applies only at the seller's request. In this example the difference between the two linear methods is more than 100,000 NIS.

Example 3: a complex calculation, a rented apartment with depreciation and improvement

An apartment bought in 2010, renovated in 2012 and rented out for 12 years under the regular track. The depreciation that was allowable, 258,083 NIS, reduces the purchase value and increases the gain. The estimated tax under the preferential linear method is 281,353 NIS.

What the example shows: when renting under the regular track, depreciation is deducted from the purchase value. By default the calculator assumes that depreciation was claimed, following Civil Appeal 5883/18 Director of Real Estate Taxation Hadera v. PIV. A seller who reported lawfully and did not claim depreciation may prove it. The improvement (renovation and extension) is index-linked from the date the work was completed, unlike ongoing repairs and maintenance. Under Tax Authority Professional Directive 5/2007, expenses that were deductible for income tax during the rental are not allowed in the betterment calculation, so each deduction should be checked before reporting.

Example 4: two sellers, different purchase dates and prices

A brother and sister sell an apartment together, 50% each. The brother bought his share in 2008 and the sister in 2018, so each one's tax is calculated separately: 145,467 NIS for the brother and 89,683 NIS for the sister, 235,150 NIS in total.

What the example shows: in a joint sale each seller has a separate calculation, based on his or her own purchase date, purchase value and exemptions. The brother, who bought before 2014, benefits from the preferential linear method and the sister does not. In the calculator you add a seller for each owner, and for anyone who bought on a different date you tick "acquired the share on a different date or for a different value".

Example 5: an inherited apartment, exempt

A daughter who inherited her parents' only apartment sells it in 2026. When the conditions of section 49B(5) are met, the sale is fully exempt from betterment tax. Without the exemption, the estimated tax would have been 194,791 NIS under the preferential linear method.

What the example shows: on the sale of an inherited apartment, the deceased's purchase date and purchase value are retained, so these were entered in the calculator. The exemption requires three conditions: the seller is the deceased's spouse, descendant or a descendant's spouse; before death the deceased owned only one residential apartment; and had the deceased sold the apartment in his or her lifetime, the sale would have been exempt. Full explanation in the article Selling an inherited apartment.

Example 6: spreading the gain for a seller aged 60 or over

A seller aged 60 or over asks to spread the real gain over four tax years. In the three earlier years the lower income tax brackets apply to him, and the estimated tax falls to 152,900 NIS, compared with 213,133 NIS without spreading.

What the example shows: in each of the earlier years, a quarter of the real gain is added to that year's income and taxed under the brackets of section 121 of the Income Tax Ordinance, but at no more than 25%. A person aged 60 or over benefits from the 10%, 14% and 20% brackets (section 121(b) of the Ordinance). Under 60, the first bracket on income that is not from personal exertion, including the gain, is 31% (section 121(a) of the Ordinance), so the 25% ceiling applies from the first shekel and spreading does not reduce the tax, unless there are unused credit points. The example in Real Estate Taxation Implementation Instruction 9/2002 (section B.3) works the same way. The portion of the year of sale is always taxed at the regular rate. Spreading is conditional on filing income tax returns for the years in the spreading period (section 48A(e)(1)), and is requested on form 7003.

Exemption, preferential linear method or spreading: when each applies

An exemption removes the tax when its conditions are met. The preferential linear method reduces the tax on an apartment bought before 2014. Spreading reduces the tax mainly for a seller aged 60 or over in the spreading years, or one with unused credit points.

The calculator shows each seller all the possible methods side by side and marks the cheapest. Eligibility for an exemption depends on the actual conditions, and a sale exempt under section 49B(2) rules out an exemption under the same section on the sale of another apartment within 18 months. On the order of sales, a replacement apartment and other tools, see Betterment tax planning when selling an apartment.

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