Refinancing a property is different from selling it. A loan may give you cash without creating an immediate sale, but it also creates debt, interest, repayment risk, and possible future tax exposure when the property is eventually sold.
Tax-compliance note, checked June 4, 2026: Israeli seller-tax planning should be framed as compliance and documentation, not a promise to avoid tax. A seller or representative generally files the real-estate tax declaration within 30 days, exemptions are conditional, and building rights, betterment levy, deductible costs, residency, and prior ownership can change the result. Use an Israeli tax lawyer or accountant before relying on any sale-tax strategy.
Step 1: Buying a Property
Imagine you buy an apartment in Tel Aviv. You pay 1 million shekels for it. You are now the proud owner of a nice home!
Step 2: Property Value Goes Up
After a few years, the area becomes very popular. More people want to live there, so your apartment is now worth 2 million shekels. If you sell it now, you would have a profit. Your profit would be 1 million shekels (because 2 million – 1 million = 1 million).
Step 3: Taxes on Profit
In Israel, when you sell a property and earn money (profit), you have to pay taxes to the government. Taxes mean giving a part of your money to the government. If your profit is 1 million shekels, you will need to pay a lot of money in taxes.
But what if you don’t want to pay taxes?
Step 4: Keep Your Property and Still Get Money
Here’s how you do it: you don’t sell your property. Instead, you do something called refinancing.
Refinancing means you go to the bank and say, “My apartment is now worth 2 million shekels, much more than before. Can I please have a new loan?” Because your apartment is now worth more, the bank says “yes” and gives you a bigger loan.
Step 5: Getting Cash Without Paying Taxes
Now the bank gives you 1 million shekels as a loan. You have cash in your pocket. You don’t sell your apartment; you keep owning it. This 1 million shekels you got from the bank is not profit—it’s just a loan. In Israel, a loan is not taxable. This means you do not have to pay taxes on this money.
Example in Numbers:
- Original cost of apartment: 1 million shekels.
- New value of apartment after few years: 2 million shekels.
- Profit if you sell: 1 million shekels (taxable).
- But instead, you refinance and take a loan: 1 million shekels (not taxable).
Summary (Quick review):
- You bought a property.
- The property went up in value.
- If you sell, you have to pay taxes.
- If you refinance, you keep the property and get tax-free money.
Now you understand a smart way to legally avoid paying taxes on real estate profits in Israel!
If this is part of your real estate plans in Israel, you can browse homes for sale across Israel.
Ready to take the next step? Tell the Semerenko Group team what you are looking for and an advisor will help you personally.
