Israel Inheritance & Gift Tax Guide 2026

Overview — No Estate or Death Tax

Israel is one of the few countries that has completely abolished inheritance tax. The inheritance tax (Mas Yerusha) was repealed effective 1 April 1981. There is no estate duty, death tax, or probate tax levied by the State of Israel on the transfer of assets upon death. The only potential tax implications of inheritance in Israel relate to capital gains tax (CGT) upon subsequent sale of inherited assets, land appreciation tax for inherited real estate, and the small gift tax applicable to lifetime transfers between non-relatives.

Inheritance Tax — Abolished 1981

Israel's inheritance tax was repealed by the 1981 Inheritance Tax Repeal Law. Before abolition, inheritance tax was imposed on beneficiaries at progressive rates. Since 1981, the transfer of assets from a deceased person to their heirs is entirely free of inheritance tax, regardless of the value of the estate, the relationship to the deceased, or the residency of the beneficiaries. Assets located anywhere in the world inherited by Israeli residents are also free of Israeli inheritance tax. This makes Israel a highly attractive jurisdiction for estate planning purposes.

Gift Tax — 0% for Close Family, Up to 25% for Others

Gift tax (Mas Matana) is levied on the donor in Israel (unless the donor is exempt). The rates depend on the relationship between the donor and the recipient:

• Spouse: 0% — fully exempt, unlimited
• Parents and children (lineal descendants): 0% — fully exempt, unlimited
• Grandparents and grandchildren: 0% — fully exempt
• Siblings: 0% for transfers up to a certain value (indexed threshold), then taxable
• Non-relatives: Up to 25% gift tax on the transfer value

The gift tax is payable by the donor. If the donor is not an Israeli resident, the recipient may be liable. Lifetime gifts to family members are an effective tax-planning tool in Israel due to the generous exemptions.

Capital Gains Cost Base — Step-Up for Inheritance

Upon inheritance, the cost base of assets is reset to their market value at the date of the deceased's death (step-up basis). This means:

• Shares and securities: The heir's cost basis is the share price on the date of death
• Real estate: The heir's cost basis is the fair market value at the date of death
• Any appreciation during the deceased's lifetime escapes CGT permanently
• If the heir subsequently sells the inherited asset, CGT is calculated only on the gain from the date of inheritance onward

This step-up rule is highly beneficial for heirs and means that holding assets until death effectively eliminates the accrued CGT liability.

Land Appreciation Tax (Mas Shevach) — Inherited Property

Inherited real estate receives special treatment under the land appreciation tax (Mas Shevach):

• No land appreciation tax is triggered upon inheritance — the transfer to heirs is exempt
• The heir's cost basis for land appreciation tax purposes is the market value at the date of death
• If the heir sells the property within a short period, the holding period of the deceased may be taken into account for determining the applicable Mas Shevach rate (25% for 4+ years, up to 49% for shorter holds)
• Owner-occupied residential property inherited by direct heirs retains the primary residence exemption for CGT purposes if the heir uses it as their primary residence

Probate and Succession Process

While there is no inheritance tax, the legal process of transferring assets upon death involves the probate system (Tzav Yerusha or Tzarich Kiyum). Key steps:

• A succession order (Tzav Yerusha) is obtained from the Family Court or the Registrar of Inheritance
• If there is a valid will, a probate order (Tzav Kiyum) is issued
• Court fees are minimal (typically a few hundred shekels)
• Real estate registration changes require a transfer order from the Land Registry (Tabu) with modest registration fees
• No wealth or estate reporting to the tax authority is required for the inheritance itself

FAQs

Is there really no inheritance tax in Israel at all?

Correct. Inheritance tax was abolished in 1981 and has not been reintroduced. There is no estate tax, death duty, or probate tax regardless of the size of the estate or the relationship of the heirs.

Do I need to report an inheritance to the Israel Tax Authority?

Generally, no reporting is required for the inheritance itself. However, if you subsequently sell inherited assets, you must report the capital gain (based on the step-up cost basis) and pay any applicable CGT.

How do I register inherited real estate with the Land Registry?

You must obtain a succession order or probate order from the court, then apply to the Land Registry (Rashut Ha'Tabu) to register the property in your name. The registration fee is a small percentage of the property value but generally much lower than purchase tax.

Disclaimer

This guide provides general information about Israeli inheritance and gift tax for the 2026 tax year. Tax laws may change. Always consult with a qualified Israeli tax advisor (Yo'etz Mas) or an Israeli estate planning attorney (Orech Din) for advice specific to your situation. InvestmentKit does not provide tax advice.