Giving Property, Gaining Peace of Mind: How to Gift Real Estate in Israel
1. Why consider a property gift?
In a soaring market, handing an apartment to a child or spouse can fast-track their home-ownership journey while keeping wealth inside the family. It also shields the asset from bidding wars with outside investors.
2. What counts as a “no-consideration transfer”?
Israel’s Tax Authority views any free conveyance as a bona-fide sale: you must file, appraise at fair market value, and, in some cases, pay tax. Preparing early avoids mortgage delays and late penalties.
3. Reliefs for close relatives
Parents, children, grandchildren, and legally married spouses enjoy a full capital-gains exemption for the giver and only one-third purchase tax for the receiver.
4. Practical optimisation tips
• Order a certified valuation to justify the discounted tax bracket.
• Gather bank approvals up front – many lenders require the signed deed before releasing funds.
• Leverage the newly expanded 24-month “replacement home” window that took effect in June 2025.
5. Transfers between non-relatives – proceed with caution
Friends, unmarried partners, or business associates trigger full capital-gains tax for the donor and standard purchase tax for the donee. Sometimes a low-price cash sale is cheaper than a pure gift – crunch the numbers before deciding.
6. Partial gifts – the 50 % trap
Donating half a property to help a child secure a mortgage is common. If parental control continues (e.g., collecting rent), tax officials may deem it abusive planning. Draft a clear co-ownership agreement and respect proportional rights.
7. Think ahead with a will
When immediate taxes outweigh benefits, bequeathing the asset via a notarised will postpones taxation and reduces sibling tension. Update the document after each purchase, sale, or major life event.
8. Key takeaway: professional advice pays off
A real-estate tax attorney and an experienced mortgage broker will keep your family gift compliant, harmonious, and financially sound.
