Selling an apartment: two things decide the outcome, the tax and the agreement
A seller who comes to the deal without first checking his betterment tax exposure may discover after signing that the net proceeds are far lower than he expected. At the same time, an agreement drafted by the buyer tends to place on the seller a liability far broader than necessary. A lawyer acting on the sale of an apartment deals with both of these together.
Under section 73 of the Real Estate Taxation (Betterment and Acquisition) Law, 5723-1963, the seller must file a declaration of the sale with the Israel Tax Authority within 30 days, including the exemption he is claiming. The sale of a sole qualifying residential apartment is exempt from betterment tax under section 49B(2) of that Law, subject to its conditions and up to the ceiling set in section 49A(a1).
Selling an apartment in a 30-second video
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In the video: three things to check before you sell an apartment. Check whether a betterment tax exemption applies, because that determines how much you will actually keep. If there is a mortgage, plan its discharge in the agreement so that the buyer receives the apartment free of any charge. And if the apartment was inherited, first put the inheritance in order and check the tax that applies to the sale.
When you need a lawyer to sell an apartment
- Before you advertise the apartment or agree a price with a buyer.
- When you own more than one apartment, or have bought a replacement apartment.
- When the apartment was received by inheritance or as a gift.
- When a mortgage registered on the apartment has to be discharged from the sale proceeds.
- When the buyer's lawyer has sent a draft agreement.
- When one of the owners lives abroad, or the apartment is registered in the name of only one spouse.
How the work proceeds
Tax and title review before marketing
Even before you advertise the apartment, it is worth knowing the expected tax liability and which exemptions are available to you. Sometimes a small change in the timing or structure of the deal changes the result significantly. At the same stage we review the Land Registry extract or the certificate of rights, the registration of the parking space and storage room, and any historical unauthorised construction. It is better to know about these before the buyer discovers them in the middle of negotiations.
Drafting or reviewing the agreement
If the draft came from the buyer's lawyer, it is reviewed and amended. The focus is on limiting the seller's representations, protecting against cancellation, and ensuring that the consideration is secured.
Signing, reporting and clearances
Reporting to the Real Estate Taxation Office within 30 days, filing applications for an exemption or for the beneficial calculation, and coordinating with the bank ahead of the mortgage discharge.
Handover and closing
Vacating the apartment, a handover protocol with meter readings, handing over the keys, and transferring the electricity, water, municipal tax (arnona) and house committee accounts. At the end: deletion of the mortgage, release of the trust funds to you, and completion of the transfer of rights to the buyer.
What the service includes
- Review of your betterment tax liability and the exemptions available to you, before the price and payment schedule are set
- Examination of the beneficial linear calculation, spreading of the betterment, recognised deductions and expenses that can be offset
- Review of any betterment levy payable by the seller and the ways to reduce it or pay it in instalments
- Coordinating the mortgage discharge with the bank and obtaining a letter of intent at the right time
- Drafting or amending the sale agreement so that the seller's representations and liability are precise and limited
- Setting a realistic handover date and a balanced compensation mechanism, rather than one weighted in the buyer's favour
- Setting up a trust arrangement for the tax payments and the discharge of charges, so that your money is released as quickly as possible and in line with the commercial terms agreed
- Handling an apartment held in an estate, co-owners, a spouse who is not registered, or an owner living abroad
- Reporting to the Real Estate Taxation Office within 30 days and obtaining the tax clearances
- Handover protocol, meter readings and transfer of accounts
- Assistance until the mortgage is deleted and the transfer of rights to the buyer is completed
What to bring to the meeting
- The original purchase agreement for the apartment and the payment receipts since then, for calculating the betterment.
- Receipts for investments in the apartment, if any, to check whether they can be deducted.
- The mortgage details and the name of the bank.
- An inheritance order or probate order, if the apartment was inherited.
- A list of the apartments owned by you and by your spouse.
- The buyer's draft agreement, if one has already been received.
Timeline and cost
Timeline: the review of title is usually completed within one to two business days of your enquiry, and the tax review also depends on the original purchase documents you provide. The declaration to the Israel Tax Authority is filed within 30 days of the sale (section 73 of the Real Estate Taxation Law), and betterment tax, if payable, is generally paid within 60 days of the sale (section 90A of that Law). The handover date is set in the agreement, and closing is completed with the deletion of the mortgage and the transfer of the rights to the buyer.
Cost: the fee is set in a written fee agreement, according to the scope of the work and the complexity of the rights, and a quote is given after an initial conversation. What affects the price and what it should include is explained in the article "How much does a lawyer cost for buying an apartment". Expenses, fees and the fees of outside professionals are not included, as set out in the box "What the fee does not include". If you are buying another apartment at the same time, you can work out its purchase tax in advance with the purchase tax calculator.
Tax review before marketing or after signing
| Subject | Review before marketing | Review after signing |
|---|---|---|
| Timing of the sale | Can be planned around the exemption | Already fixed in the agreement |
| Exemption or beneficial linear calculation | The best route is chosen before the price is set | Reviewed only once the price has been agreed |
| Payment schedule | Structured to cover the tax and the mortgage discharge | May not match the tax payments |
| Seller's representations | Drafted in advance and limited | As per the buyer's draft |
Questions that come up in deals of this kind
How much betterment tax will I pay on selling the apartment?
Betterment tax is levied on the gain, that is, the difference between the sale value and the purchase value plus recognised expenses. There are exemptions and reliefs, including an exemption for a seller of a sole qualifying residential apartment up to a ceiling set by law, and a beneficial linear calculation for apartments bought before 2014. The result depends on your personal circumstances, so it is calculated individually before the price is set.
What is the exemption ceiling for a sole apartment?
The exemption ceiling for a sole qualifying residential apartment stands at NIS 5,008,000, and the amounts have been frozen and are not adjusted for the tax years 2025 to 2027. Above the ceiling, tax is calculated on the proportionate part (section 49A(a1) of the Real Estate Taxation Law). The amount and the eligibility conditions should be verified against the official source at the time of the sale.
Do I have to pay off the mortgage before the sale?
No. The discharge is made out of the sale proceeds, on the basis of a letter of intent from the bank stating the amount required to delete the charge. It is important to coordinate the timing of the letter of intent with the payment schedule, because it is valid only for a limited period.
The buyer wants me to declare that the apartment has no defects at all. Should I agree?
A sweeping declaration of this kind places on you broad liability, even for things you do not know about. The right wording is a declaration of what you actually know, together with a statement that the apartment is sold as is and that the buyer has inspected it. This is one of the material differences between a draft prepared by the buyer and a balanced agreement.
What happens if the buyer does not pay on time?
A good sale agreement sets out a clear sequence: a warning notice, late-payment interest, agreed compensation and, ultimately, a right of cancellation. It is also important that the agreement allows you to withdraw from the deal without the buyer's cautionary note remaining stuck on the property.
Related articles and pages
Not sure the deal is safe? Let's start with a conversation
In an initial conversation we will go over the property, the other party and the payment schedule, and tell you what needs to be checked before you sign.