Mas shevach (מס שבח) is a tax on the gain from selling real estate: the difference between the sale price and the purchase price, after deducting permitted expenses and adjusting for inflation.
The residential apartment exemption
In many cases, selling a single residential apartment is exempt from mas shevach, under conditions set by law. Among the conditions: it is your only apartment, it was held for a minimum period, and a similar exemption was not used recently. The exemption also has a value ceiling that is updated from time to time.
When do you pay?
- An additional apartment – usually taxable.
- A quick sale after using a previous exemption.
- A sale above the value ceiling – the excess part may be taxable.
Expenses that reduce the tax
Lawyer's fees, agent's fees, the appraiser, certain renovations and interest payments under certain conditions may be recognized as expenses. Keep your receipts.
Upgraders and investors
If you are selling an apartment to buy another, or own more than one apartment, early planning of the sale and purchase dates can save significant amounts.
More: upgrading your home, investment apartments.