Israel Capital Gains Tax Guide 2026

Overview — Capital Gains Taxation in Israel

Capital gains in Israel are taxed separately from ordinary income for individuals. The system distinguishes between real (inflation-adjusted) gains and nominal gains by applying CPI indexation to the cost basis. Legal entities (companies) are taxed on capital gains at the corporate tax rate of 23%. The Israel Tax Authority classifies gains into four main categories: gains from securities, gains from real estate, gains from business assets, and gains from other assets (including cryptoassets).

Capital Gains Tax on Securities — 25% Standard, 30% Controlling Holder

Gains from the sale of securities (shares, bonds, options, ETFs) are taxed as follows:

• Standard rate: 25% on the real gain (inflation-adjusted cost basis)
• Controlling holders (≥10%): 30% on gains from shares in a company where the seller holds at least 10% (alone or with related parties)
• Inflation adjustment: The cost basis is indexed to the Israeli CPI from the date of acquisition to the date of sale, ensuring only real gains are taxed
• Loss offset: Capital losses can be offset against capital gains in the same year. Unused losses may be carried forward indefinitely

Exemptions — TASE-Listed Shares and Government Bonds

Certain capital gains are fully exempt from Israeli CGT:

• TASE-listed shares: Gains from the sale of shares listed on the Tel Aviv Stock Exchange are generally exempt for non-substantial holders (less than 10% ownership, not a controlling holder) — this is a significant benefit for retail investors
• Government bonds: Gains from Israeli government bonds (including CPI-linked bonds) are exempt for individual investors
• Certain foreign shares: Shares listed on recognised foreign exchanges may be exempt under specific conditions (varies by tax treaty and type of share)
• Primary residence: Full exemption on sale of owner-occupied home (subject to conditions — one sale per 4 years)

Indexation Relief for Pre-2003 Assets

For assets acquired before 1 January 2003, special indexation rules apply. The cost basis is indexed using the CPI, and the entire gain (including the inflationary component) is treated as a real gain taxable at the standard CGT rate. For assets acquired after 2003, only the real gain above inflation is taxed, while the inflationary component is tax-free. This approach means that long-term holders of pre-2003 assets pay tax on the full nominal gain (indexed for inflation), effectively taxing the inflationary gain.

Mas Shevach — Land Appreciation Tax (25-49%)

Land appreciation tax (Mas Shevach) applies to gains from the sale of land and real estate not classified as residential property. Rates depend on the holding period:

• Held 4+ years: 25% flat rate on the real (inflation-adjusted) gain
• Held less than 4 years: Progressive rates up to 49% depending on the gain amount
• The inflationary component of the gain (CPI indexation) is tax-free
• Special rules apply for agricultural land and development land

Reporting and Payment

Capital gains must be reported on the annual tax return (Doch Shnati). For securities traded through an Israeli broker, tax is generally withheld at source. For real estate sales, the seller must report the gain and pay the tax as part of the sale process (through the Israel Tax Authority's property division). Capital gains on foreign assets and unlisted securities must be self-reported. The tax is generally due on the date of the transaction or within 30 days for real estate transactions.

FAQs

Are cryptocurrency gains subject to capital gains tax?

Yes, cryptocurrency gains are generally treated as capital gains and taxed at 25% (or 30% for controlling holders). The Israel Tax Authority has issued guidance treating crypto as an asset for tax purposes. Mining income and staking rewards may be treated as business income.

Can I offset capital losses from one year against gains from future years?

Yes, unused capital losses can be carried forward indefinitely and offset against future capital gains. There is no carryback of losses.

Is there a distinction between short-term and long-term gains for securities?

No, for securities other than real estate, the CGT rate is the same regardless of holding period (25% standard, 30% for controlling holders). However, the inflation adjustment means that holding assets longer results in a larger CPI indexation adjustment and therefore a lower effective tax on nominal gains.

Disclaimer

This guide provides general information about Israeli capital gains tax for the 2026 tax year. Tax laws and rates may change. Always consult with a qualified Israeli tax advisor (Yo'etz Mas) or the Israel Tax Authority directly for advice specific to your situation. InvestmentKit does not provide tax advice.