For an Israeli property sale, Mas Shevach depends on the statutory acquisition value, allowable costs, depreciation, indexing, acquisition periods and any relief. A 25% rate is relevant to certain taxable real gains, but it is not universal. Preserve the purchase agreement, payment evidence and invoices for potentially allowable expenses. A receipt does not automatically make an expense deductible, and a missing original invoice does not always end the enquiry: duplicates or a defined alternative-evidence procedure may be relevant. This page helps organize the records for a professional assessment.
If you bought years ago and threw out the folder, that missing paperwork can quietly add tens of thousands of shekels to your bill. Here is exactly what to keep, why each one matters, and how to prove it.
How a receipt turns into tax saved
If an expense is fully allowable against a gain taxed at 25%, a one-shekel deduction reduces that simplified tax calculation by 25 agorot. Eligibility, allocation, relief and other tax rules can change the result. Mas shevach taxes the gain, not the sale price, and your gain is the sale price minus your indexed cost basis (the purchase price plus deductible costs), so the more real cost you can document, the smaller the number the tax rate touches. If the allowable costs cancel the whole gain, there is no gain left to tax, but you still file the sale declaration within 30 days and list the deductions you claim in it.
Allowable expenses receive the index treatment prescribed by the law. They must relate to the property, satisfy the deduction conditions and not already be included or deducted elsewhere. Preserve evidence of both the work and payment; if records are missing, ask which duplicates or other evidence the applicable procedure permits.
My worked example (my own estimate, basis shown). Say you bought for NIS 1,500,000 and sell for NIS 2,500,000, a nominal gain of NIS 1,000,000. Now suppose you can document NIS 60,000 of purchase tax, NIS 25,000 in combined lawyer and agent fees on the purchase, NIS 90,000 of receipted renovations, and NIS 30,000 of agent and lawyer fees on the sale. Assume all NIS 205,000 of those costs are allowable under the statute. The taxable gain drops from NIS 1,000,000 toward NIS 795,000 before any index linkage and before exemptions. At an assumed 25% rate, the NIS 205,000 deduction changes this simplified tax figure by NIS 51,250. This is an illustration on round numbers and ignores CPI indexation and any single-apartment exemption, which would change the final figure; treat it as a sizing estimate, not a quote. Check any exemption first, but retain the records even if you expect a zero assessment; eligibility or the taxable portion may need to be reviewed.
The deductible-versus-not receipt table
The table identifies records that can support the calculation. Every potential deduction still depends on the statutory conditions, the connection to the property, proof and any previous deduction.
| Receipt or document | Can support an allowable cost or basis item? | What it proves and why it counts |
|---|---|---|
| Original purchase agreement (heskem mechira) | Yes, foundational | Evidence of the agreed price and acquisition date. If the original is missing, seek a certified copy and other records; statutory acquisition value is not determined by document possession alone. |
| Proof of purchase price (bank transfers, payment confirmations) | Yes | Backs up the contract price with actual money movement, which the assessor may ask to see. |
| Purchase-tax receipt (mas rechisha) | Yes | A direct acquisition cost, added to your basis and index-linked from the date paid. |
| Lawyer fee invoices (purchase and sale) | Yes | Legal fees on both the buy and the sell side are deductible transaction costs. |
| Agent/broker fee invoices (purchase and sale) | Yes | Commission you paid your own agent is deductible, but only up to 2% of the price on the purchase and 2% of the price on the sale (details below); keep the tax invoice, not just a WhatsApp. |
| Renovation invoices (capital improvements) | Yes, if a real upgrade | Work that adds to or upgrades the property: a new balcony, a secure room (mamad), underfloor heating, a gut renovation. |
| Improvement receipts (added rooms, systems) | Yes, if a real upgrade | Same logic: it must enlarge or improve, not just restore. |
| Betterment-levy payment (heitel hashbacha) | Yes | A levy you already paid can reduce the gain for mas shevach. Keep the municipal payment confirmation. |
| Mortgage-registration costs | Often yes | Costs of registering the mortgage are transaction-linked. Real interest on a loan taken to buy or improve the property can also be deducted when the section 39A conditions are met; see the mortgage section below. |
| Appraiser invoices (shamai) | Yes | A valuation tied to the purchase or sale is a documented transaction cost. |
| Accountant invoices (for the sale) | Yes | Professional fees to prepare and file the sale are deductible costs of the transaction. |
| Land Registry (Tabu) fees you paid when you bought | Yes | Fees paid in connection with acquiring the property under the land transfer fee rules are a listed deduction (section 39(4)). |
| Licensed surveyor invoices (moded musmach) | Yes | Like the appraiser’s fee, a licensed surveyor’s fee paid in connection with the purchase, an improvement or the sale is a listed deduction (section 39(7A)). |
| Costs of an objection or appeal over the tax | Yes | The costs of preparing the declaration and of handling the tax through assessment, objection and appeal proceedings are allowed (section 39(11A)). |
| Routine maintenance: painting, fixing a leak, replacing a broken tap | No | Ordinary upkeep restores condition, it does not upgrade. The Tax Authority disallows it. |
| Water bills, general arnona and other running costs | No | They pay for holding and using the home, not for buying, improving or selling it, so they are not among the expenses section 39 allows. |
| Any cost already deductible for income tax | No | Section 39 allows an expense only if it is not deductible under the Income Tax Ordinance, so a cost that belongs against rental or business income is not claimed again here. |
| Costs that cannot be substantiated by acceptable evidence | No | The claimant must substantiate the expense. Where invoices are missing, any alternative-evidence or estimation route must meet the applicable conditions; do not assume it will be accepted. |
| Furniture, appliances, decor you take with you | No | Movable items are not part of the property’s value and are not deductible against the gain. |
The documents that set your starting number
Your cost basis starts with two papers: the original purchase agreement and proof you actually paid that price. The contract fixes the purchase price and the acquisition date, which is the anchor for the whole calculation and also for the linear pre-2014 split if you bought before 1 January 2014. The acquisition date decides how much of your gain is exempt under the older linear rules, so the contract is doing double duty. If you bought before 2014, read how the linear calculation works before you file.
Proof of the price is the back-up layer. Bank transfer slips, payment confirmations, and the lawyer’s trust-account records show the money really moved. Assessors sometimes ask for this when a contract figure looks unusual, and an inherited property may require the deceased’s acquisition records. Carryover treatment generally applies where the death occurred on or after 1 April 1981; earlier deaths have different statutory basis rules. If that is your situation, see selling inherited property.
The purchase-tax receipt people forget
Purchase tax paid on acquisition is a listed potential deduction, subject to the statutory conditions and any required allocation. Find the original payment confirmation from the Tax Authority. Apply the statutory index adjustment to the allowable amount and preserve the original payment date and evidence.
The professional invoices: lawyer, agent, appraiser, accountant
Professional fees connected with acquisition, sale or the relevant tax work may qualify under the deduction rules. Keep the invoice, engagement and payment evidence. Legal and brokerage fees must be agreed for the actual service; 2% plus 18% VAT equals 2.36% as arithmetic, but no fixed fee or verified market norm is established here.
For the tax, the law caps what you can deduct: commission counts only up to 2% of the price you paid on the purchase and up to 2% of the price you received on the sale. On the sale side the Tax Authority director can accept a higher amount if you show that special circumstances of the deal justified it. Commission above the cap stays in your taxable gain. See standard agent fees in Israel for the detail.
Appraiser invoices matter when you hired a shamai to value the property for the purchase or the sale, or to challenge a betterment-levy assessment. Accountant invoices for preparing and filing the sale declaration are deductible too. Keep the provider’s invoice and payment evidence, and have the adviser confirm the deduction’s statutory basis and any additional documentation requirements.
Renovations and improvements: the line that gets challenged
Distinguish capital improvements from routine maintenance and from other potentially allowable transaction expenses. An improvement upgrades or adds: a new balcony, an added room, a converted storeroom, a secure room, central air, a full kitchen rebuild. Routine maintenance restores what was already there: repainting, fixing a leak, swapping a cracked tile, servicing the boiler. The classification and allowable amount depend on the actual work, its evidence and the statutory rules; do not deduct a maintenance cost again if it belongs in an income-tax calculation.
Two practical traps catch sellers here. First, obtain lawful invoices and payment evidence for the work. If they are missing, seek duplicates and have your adviser examine whether the Tax Authority’s defined alternative-evidence procedure is available; it is not automatic. Second, mixing a renovation with maintenance on one invoice muddies it, so ask the contractor to itemize the upgrade work separately. Keep renovation invoices and payment dates so any allowable cost and its index adjustment can be calculated.
Betterment levy and mortgage-registration costs
If you paid a betterment levy (heitel hashbacha), that payment can reduce your mas shevach gain, so keep the municipal payment confirmation. The standard levy is 50% of assessed uplift from a qualifying planning event, subject to statutory relief; liability and payment timing must be checked for the actual rights and transaction. It is a separate municipal charge from the national mas shevach, but the receipt for it feeds back into the income-tax calculation. Read the betterment levy for sellers to see when it applies.
Mortgage-registration costs tied to the property are documented transaction expenses worth keeping. Mortgage interest can count too, but only the real (inflation-adjusted) part and only under set conditions. Section 39A of the Real Estate Taxation Law allows real interest paid from the purchase date until 90 days after the sale on a loan taken to buy or improve the property close to the time you bought or improved it, or to repay such a loan. The lender must not be a relative, the interest must not already be deductible for income tax, and for a home not kept in double-entry books the loan must be secured by a mortgage, a pledge or a warning note registered around the time you took the loan. Keep the bank’s loan and interest statements with the registration papers, and let your adviser work out the real interest. For the discharge side of a sale, see paying off your mortgage when selling.
Your keep-everything checklist before you list
Pull this folder together before the property hits the market, not the week the contract is signed. The general Tax Authority declaration deadline is 30 days from the transaction date, and gathering ten-year-old receipts under that clock is how deductions get missed.
- Original purchase agreement and the date you signed it.
- Proof of payment of the purchase price (bank transfers, trust-account records).
- Purchase-tax (mas rechisha) receipt from when you bought.
- Lawyer invoices from the purchase, and you will add the sale-side invoice at closing.
- Agent commission invoices from both the purchase and the sale.
- Renovation and improvement invoices from registered contractors, itemized, from the date of purchase.
- Betterment-levy payment confirmation, if you ever paid one.
- Mortgage-registration documents and any discharge paperwork.
- Appraiser and accountant invoices linked to the purchase or the sale.
Separate potential capital and transaction costs from routine upkeep and movable items. Ask your adviser to classify any mixed work, identify prior deductions and explain the evidence for each amount claimed.
The deduction rules on this page come from sections 6, 39, 39A and 73 of the Real Estate Taxation (Capital Gain and Acquisition) Law 1963 (current consolidated text), checked 30 October 2026.
This is general information, not legal or tax advice; confirm with a licensed professional.
Where this fits in the bigger sale
Receipts are one piece of your documents and due-diligence file, which sits inside the wider job of selling property in Israel. The receipts here feed straight into your tax bill, so read them alongside how mas shevach is calculated and the full taxes and costs of selling. For the master list of every paper you need, see the seller document checklist, and to avoid the classic errors, read tax mistakes sellers make.
Want a clear read on your likely tax and which of your receipts actually count before you list? Tell us about your property and we will help you sort the paperwork that lowers your bill.
