The linear calculation (Amendment 76) splits your gain by the calendar. Profit that built up before 1 January 2014 is exempt from mas shevach, and profit from 1 January 2014 onward is taxed at 25% on the real (inflation-adjusted) part. The split is done by counting days: total days owned, days before the line, days after the line. The longer you held the property before 2014, the larger your tax-free share. This benefit also reaches foreign sellers who cannot use the single-apartment exemption, and it carries over to heirs who sell a long-held inherited home. A draft bill proposes phasing the benefit out (raising the pre-2014 rate from 0% toward 25% by around 2030), so the rule is not guaranteed to stay as it is. None of the legal figures below are a substitute for a tax adviser checking the live statute on your sale.
You bought before 2014, you are sitting on a real gain, and you want to know how much of it the tax authority actually touches. This page shows the day-count math with a worked example and flags the risk that the benefit shrinks.
What “linear” means: the gain is sliced by time, not by value
Linear means the law treats your gain as if it grew at a steady, even rate across every day you owned the property. It does not try to figure out how much of the profit happened in 2009 versus 2021. It just draws one line on the calendar (1 January 2014), counts the days on each side, and applies those proportions to the whole real gain.
So if you owned the property for 6,000 days and 3,000 of them fell before 2014, then half of your real gain is treated as pre-2014 (exempt) and half is post-2014 (taxed at 25%). The actual market behavior of those years is ignored. This is a deliberate simplification written into the Real Estate Taxation Law by Amendment 76.
The 25% rate and the inflation rule do not change here. Israel taxes only the real gain, the part above CPI (madad) indexation, and the inflationary component is never taxed. The linear method sits on top of that: it takes the real gain, then carves it into an exempt slice and a taxed slice by days. For the base rules on the gain itself, see our page on mas shevach (capital gains tax).
Why 1 January 2014 is the line
1 January 2014 is the date Amendment 76 took effect. Before that reform, an Israeli resident could often sell a residential apartment fully exempt once every four years, regardless of value. The reform tightened the exemption and replaced part of the old generosity with the linear method as a transition rule, so people who had owned property for years under the old regime would not lose their built-up exemption overnight.
That is why the pre-2014 portion is exempt: it represents gain that accumulated while the old rules applied. The post-2014 portion is taxed at 25% because it accumulated under the current rules. The date is fixed in the statute and applies the same way to everyone, including non-residents.
The day-count split, step by step
The mechanics are arithmetic. Here is the order a tax adviser or the tax-office software follows:
- Find the real gain. Take the sale price, subtract the CPI-indexed purchase price and CPI-indexed deductible costs (purchase tax, agent commission, legal fees for purchase and sale, capital improvements, any betterment levy paid). What is left, above inflation, is the real gain. Keep your receipts: see tax documents and receipts.
- Count total days owned. From the purchase date to the sale date.
- Count pre-2014 days. From the purchase date to 31 December 2013.
- Count post-2014 days. From 1 January 2014 to the sale date.
- Apportion. Exempt share = pre-2014 days divided by total days. Taxed share = post-2014 days divided by total days.
- Tax the post-2014 slice at 25%. Multiply the real gain by the taxed share, then by 25%.
Worked before-and-after-2014 example (our own estimate)
The figures below are our own worked illustration to show the method. They are not your numbers and not tax advice. Basis: a real gain of NIS 1,000,000 and a 25% rate from the fact bank, with two purchase dates.
Setup. Assume the real (already inflation-adjusted) gain is NIS 1,000,000 and the property is sold on 1 January 2026. We compare a seller who bought in 2004 with one who bought in 2010.
| Item | Bought 1 Jan 2004 | Bought 1 Jan 2010 |
|---|---|---|
| Total years owned to 1 Jan 2026 | 22 years | 16 years |
| Years before 2014 (exempt period) | 10 years | 4 years |
| Years from 2014 (taxed period) | 12 years | 12 years |
| Exempt share of the gain | 10 / 22 = about 45.5% | 4 / 16 = 25% |
| Taxed share of the gain | 12 / 22 = about 54.5% | 12 / 16 = 75% |
| Taxable real gain | about NIS 545,000 | about NIS 750,000 |
| Mas shevach at 25% | about NIS 136,000 | about NIS 187,500 |
What this shows. Same NIS 1,000,000 real gain, same sale date, same 25% rate. The 2004 buyer pays roughly NIS 136,000 and the 2010 buyer pays roughly NIS 187,500. That is a difference of about NIS 51,000, around 38% more tax, purely because the 2010 buyer owned the property six fewer years before the 2014 line. Per extra year of pre-2014 ownership in this example, the exempt slice grows and the tax drops by very roughly NIS 8,000 to NIS 9,000. The lesson: an early purchase date is worth real money, and it is worth getting the exact day count right rather than rounding to years.
Note we used whole years for clarity; the tax office counts actual days, so your true split will differ slightly. We also assumed the real gain is already worked out; arriving at that figure is its own job, and it depends heavily on indexed costs and deductions.
The long-held-property advantage
The earlier you bought, the bigger your tax-free slice, and the effect compounds the further back you go. A 1995 purchase has 19 pre-2014 years to count; a 2012 purchase has only 2. Two neighbors selling identical apartments on the same day for the same gain can owe very different tax simply because one held longer before 2014.
This is the single most valuable thing about the linear method for long-term owners, and it is why it matters so much to confirm your exact acquisition date from the original purchase contract before you model the tax. It also interacts with the single-apartment exemption: an Israeli resident selling their only home below the NIS 5,008,000 ceiling may be fully exempt and never need the linear math at all, while a seller who does not qualify for that exemption falls back on linear to shield the pre-2014 part.
Inherited long-held property: a hidden upside
When you inherit Israeli property, you step into the deceased’s tax position. Your cost basis and, importantly, your acquisition date are what the deceased paid and when they bought, not the value or date at the moment of death. Israel has no inheritance or estate tax, so the gain is simply deferred to your eventual sale.
That usually means a larger taxable gain (because the basis is the old, low purchase price), but it also means a longer pre-2014 exempt period if the deceased bought long ago. If a parent bought in 1990, the heir who sells in 2026 still counts all those pre-2014 years toward the exempt slice. There is also a separate full-exemption route under section 49b(5) for a qualifying heir of a sole-apartment owner. The two interact in fact-specific ways, so read our dedicated page on selling inherited property and get advice.
Why this matters to foreign sellers
Foreign-resident sellers generally cannot use the Israeli single-apartment exemption. Since Amendment 76, a non-resident qualifies for that exemption only by proving, with confirmation from their home country, that they own no other residential apartment there, which is hard to obtain in practice.
The linear calculation is the fallback that still helps them. A non-resident who bought before 2014 can still treat the pre-2014 portion of the gain as exempt and pay 25% only on the post-2014 portion. The 2014 to 2017 cap that limited a family to two linear sales was lifted on 1 January 2018, so that restriction no longer bites. If you sell from abroad, also review selling as a foreign resident and the taxes and costs sub-hub for withholding rules, because the buyer will withhold tax (commonly 7.5% or 15%) until your clearance is issued.
The phase-out risk: do not treat the 0% slice as permanent
A draft bill has proposed cancelling or phasing out the preferential linear benefit. The versions reported include raising the rate on the pre-2014 portion from 0% gradually toward 25% (described as roughly 5 percentage points a year up to about 2030), or a hard cut-off where the benefit ends after 31 December 2030. As of mid-2026 this is a proposal, not enacted law, and the exact mechanism is unsettled.
What it means for you in plain terms: the tax-free pre-2014 slice you see in the example above may shrink or disappear for sales completed after a future date. If your gain is large and most of it sits in the pre-2014 exempt slice, the timing of your sale could matter a great deal. Do not plan around a 0% pre-2014 rate as if it were locked in. Watch the Knesset Arrangements Law and Israel Tax Authority publications, or have your adviser do it.
A short checklist before you rely on the linear method
- Confirm your exact purchase date from the original purchase agreement; the day count drives the split.
- Gather indexed cost receipts (purchase tax, agent, legal, improvements, betterment levy) so the real gain is calculated correctly.
- Check whether a full exemption applies first (single-apartment or inheritance route); linear is the fallback, not always the answer.
- If inherited, confirm the deceased’s acquisition date and whether section 49b(5) applies.
- If non-resident, plan for buyer withholding and a tax-clearance certificate before title can transfer.
- Check the current law on the phase-out close to your sale date, not from an old article.
- File on time: the sale declaration is due within about 30 days of signing.
Why a tax adviser must confirm the current rules
The linear method is arithmetic, but the inputs are not. The real gain depends on indexed costs and deductions that are easy to get wrong, the exemption interactions are fact-specific, and the phase-out proposal could move the goalposts between when you read this and when you sign. The 25% rate, the NIS 5,008,000 ceiling, and the 2014 line are stable as of 2026, but the preferential pre-2014 treatment is exactly the part under political pressure.
Use this page to understand the mechanism, then have a real estate tax adviser run your actual numbers against the live statute before you sign anything. For the full picture, start at the taxes and costs sub-hub, walk the process on how to sell step by step, or return to the main guide on selling property in Israel.
Want us to connect you with a tax adviser who handles linear mas shevach and pre-2014 sales? Tell us about your sale and we will point you in the right direction.
