Israeli Inheritance Tax for Foreigners: 2026 Guide

TL;DR:

• Israel: no inheritance tax, no estate tax, no gift tax.
• Foreign heirs inherit at original cost basis — no step-up.
• Later sale of inherited Israeli real estate or shares triggers Israeli capital gains tax.
• Home country may tax the same inheritance — US, UK, France are the big three exposures.
• Making Aliyah before selling inherited property unlocks substantial benefits.

The Israeli Side

Since 1981, transfer at death is not a taxable event in Israel. Probate confirms the transfer; the Tabu transfers title; no tax is owed on the transfer itself. This puts Israel in the same camp as Australia and Canada (no inheritance tax) and apart from the US, UK, France, Germany, and most of Europe.

Where the Real Money Goes — The "Hidden" Israeli Taxes

1. Capital Gains at Eventual Sale (Mas Shevach)

The heir steps into the decedent's shoes. Cost basis carries over. If grandfather bought a Tel Aviv apartment in 1985 for ₪150,000 and the heir sells in 2026 for ₪4,500,000, the heir is taxed on ~₪4.35M of appreciation at 25% (real-estate Mas Shevach rules, with linearization for pre-2014 holding). Israeli residents may qualify for the principal-residence exemption; foreign-resident heirs typically do not.

2. Purchase Tax Surcharge if Heir Buys More Property

Once the heir owns one Israeli property by inheritance, the "single dwelling" rate is lost for any future purchase — see Mas Rechisha rates.

3. Rental Income

If the inherited property is rented, the income is Israeli-source and taxable in Israel under the 10% / progressive / business-track choices.

The Foreign-Country Side

Foreign heirs may face home-country estate tax on the same assets. The big ones:

• United States: US citizens' worldwide assets are exposed to estate tax (40% above the unified credit exemption — $13.61M in 2024, scheduled to sunset in 2026). Non-citizen US-residents face the same. Non-resident-aliens are taxed only on US-situs assets.
• United Kingdom: UK-domiciled decedents are taxed on worldwide assets at 40% above £325,000 nil-rate band. Deemed-domicile rules can catch long-term Israeli residents who retain UK ties.
• France: taxes inheritances by residence of decedent or heir; rates up to 60% for unrelated heirs.
• Germany: taxes worldwide assets of German-domiciled decedents; rates up to 50%.

Estate Treaties: Limited Help

Israel has very few estate-tax treaties — the US-Israel treaty does NOT cover estate tax. Double-tax relief usually comes from unilateral foreign tax credits in the home country, which is messy because Israel imposes no estate tax to credit against.

Planning Levers

1. Make Aliyah before selling. An oleh selling inherited Israeli real estate may qualify for principal-residence exemption after meeting holding/use rules.
2. Lifetime gifts. Israel has no gift tax for transfers between relatives — but the recipient takes original basis, and US/UK gift-tax rules may still apply to the donor.
3. Trust structures. Carefully designed Israeli or foreign trusts can manage both Israeli rental income and foreign estate tax. Trust taxation is technical — see our foreign trust guide.
4. Insurance wrapping. Some foreign-life policies sidestep both Israeli capital gains and US estate tax if structured correctly.
5. Holding-company restructuring before death rather than after, when planning options collapse.

Probate Logistics for Foreign Heirs

Probate in Israel runs through the Registrar of Inheritance (Rasham Le'Inyanei Yerusha). Foreign heirs need apostilled death certificates, marriage and birth certificates establishing relationship, and (often) a sworn translator. Israeli counsel typically files the probate petition and represents heirs at the Tabu.