There is no standard percentage of the sale price that every seller keeps. Net cash depends on the mortgage settlement, taxes, agreed fees and other transaction costs. The price is never what lands in your account. Possible deductions include the mortgage settlement and applicable early-repayment charges, Mas Shevach after any relief, a qualifying betterment levy, agreed brokerage and legal fees, and the current charges for the required official services. Do not assume a standard tax result, fee percentage or registry-cost allowance.
For the hypothetical fees and tax assumptions in the table below, a NIS 3,000,000 sale with NIS 800,000 of mortgage settlement nets NIS 2,110,000. Strip out the mortgage and your actual selling costs (agent plus lawyer plus clearances) run near NIS 90,000, about 3% of the price, with the assumed brokerage fee being the largest professional charge in this particular example. One sensitivity illustrated below is the absence of a Mas Shevach exemption: 25% on a NIS 1,000,000 real gain is NIS 250,000, which dwarfs every other cost combined.
The full waterfall on a NIS 3,000,000 sale
This arithmetic illustration assumes a NIS 3,000,000 sale, a NIS 800,000 mortgage settlement, full eligibility for the sole-dwelling exemption, no betterment levy or additional prepayment charge, and the stated fees as hypothetical agreed amounts. Read it as a stack: each row takes money off the line above it.
| Line | Amount (NIS) | Running total (NIS) |
|---|---|---|
| Sale price | 3,000,000 | 3,000,000 |
| Less mortgage payoff (balance) | -800,000 | 2,200,000 |
| Less mas shevach (single-apartment exemption applies) | 0 | 2,200,000 |
| Less betterment levy (no new plan added value) | 0 | 2,200,000 |
| Less agent commission (2% plus 18% VAT) | -70,800 | 2,129,200 |
| Less seller lawyer (0.5% plus 18% VAT) | -17,700 | 2,111,500 |
| Less clearances and Tabu fees | -1,500 | 2,110,000 |
| Net cash in hand | 2,110,000 | 2,110,000 |
On this NIS 3,000,000 sale the total of all selling costs (agent, lawyer, clearances) is about NIS 90,000, which is 3.0% of the price. The two professional fees alone (agent plus lawyer) come to NIS 88,500, or 2.95%. Basis: 2% agent plus 0.5% lawyer, both grossed up by 18% VAT, plus NIS 1,500 in clearances and registry fees. In this example, the assumed brokerage charge is four times the assumed legal charge: both percentages are increased by the same 18% VAT rate. Actual fee quotes can differ.
Reading each line: what it is and who decides it
Mortgage payoff: the balance, not your old loan amount
Subtract what you still owe today, not what you borrowed. Obtain the bank’s current settlement figure and letter of intent (mikhtav kavanot) specifying the conditions for releasing its security. After payment, obtain the required discharge documents and verify cancellation in the relevant registry. A prime-linked track generally falls within the exemption from the economic interest-difference component, but other applicable fees can remain. Variable tracks are not all exempt: reset frequency, the repayment date and the statutory formula matter. Obtain a breakdown for every track. Run your own balance and penalty check on the dedicated page: paying off a mortgage when selling in Israel.
Mas Shevach: calculate the gain and eligibility for relief
Mas Shevach depends on acquisition history, eligible costs, indexing, relief and other applicable tax rules. A 25% rate is relevant to certain real gains; taxable historical inflation and surtax can also matter. The NIS 5,008,000 sole-dwelling exemption ceiling is fixed through 2027, but all qualifying-dwelling, ownership, exact 18-month and residency-evidence conditions must be met. That is why the waterfall above shows 0 on this line. If you do not qualify, this line can be your biggest deduction by far. The full math, the linear 2014 split, and inherited or non-resident cases live on capital gains tax when selling in Israel.
Betterment levy: check the assessment, trigger and any relief
The standard betterment levy is 50% of assessed uplift from a qualifying planning event, subject to statutory relief and special rates. Confirm the liable party, relevant planning history and payment or security required for registration. A hypothetical NIS 2,000,000 chargeable uplift at 50% would produce NIS 1,000,000 of levy; a market-price increase alone does not establish that assessment. See the betterment levy for Israeli sellers to check whether your property is exposed.
Agent commission: the largest cost you can negotiate
Brokerage liability and the agreed rate should be set out in the written engagement, including VAT treatment and the conditions for earning the fee. The 2% and 1.5% rates below are comparison assumptions, not statutory rates or verified market averages. On the NIS 3,000,000 sale, 2% plus VAT is NIS 70,800; dropping to 1.5% plus VAT would be NIS 53,100, a NIS 17,700 saving. Details and exclusivity rules are on standard real estate agent fees in Israel.
Legal work, clearances and registration charges
Get a written legal-fee quote and check the current fee for each registry or clearance service; there is no single verified range covering every action, and you need a municipal clearance (ishur iriya) confirming arnona and any betterment are paid plus a Tax Authority clearance for mas shevach. Without both clearances, the registry will not record the buyer. You must also report the sale to the Tax Authority within 30 days of signing.
How a missed exemption changes the number
One potentially material change in net proceeds is whether, and to what extent, Mas Shevach applies. To show it, take the same NIS 3,000,000 sale but assume a NIS 1,000,000 real taxable gain that does not qualify for the exemption.
| Scenario | Mas shevach | Net cash in hand (NIS) |
|---|---|---|
| Exemption kept (waterfall above) | 0 | 2,110,000 |
| No exemption, 25% on NIS 1,000,000 real gain | -250,000 | 1,860,000 |
Losing the exemption on a NIS 1,000,000 real gain costs NIS 250,000, which is 8.3% of the sale price and about 11.8% of the net you would otherwise keep. Basis: 25% of NIS 1,000,000, compared against the NIS 2,110,000 exempt-case net. In this simplified example, the assumed NIS 250,000 tax exceeds the assumed professional and clearance costs. Real transactions may have different taxes, mortgage charges and fee quotes.
Try the numbers with your own figures
The selling hub carries an on-page net-proceeds calculator where you can drop in your real sale price, mortgage balance, gain, and fee rates and watch the waterfall update. Use it to stress-test the two big unknowns: your exact mortgage payoff (ask your bank for the balance letter) and whether you keep the mas shevach exemption.
Confirm your payoff letter and exemption status
- Mortgage balance: get the bank payoff letter and ask whether any early-repayment fee applies to your track.
- Exemption status: review the qualifying-dwelling and family-ownership tests, exact 18-month periods, entire-interest requirement and applicable residency evidence.
- Betterment exposure: ask the local committee whether any plan has raised your property’s value; do not assume zero.
- Fee quotes in writing: get the agent and lawyer percentages, and confirm VAT is 18% on top.
- Clearances and deadline: line up the municipal and tax clearances early, and file the sale declaration within 30 days of signing.
Quick answers for net-proceeds questions
Is the sale price taxed before I see it?
No. There is no percentage transfer tax on the seller. What reduces your net is mas shevach on the real gain (often zero with the exemption), any betterment levy, and your own fees.
Does the buyer ever hold back part of my money?
An advance on the seller’s Mas Shevach can be required under section 15, and it is not limited to foreign sellers. The applicable standard rate depends on acquisition date and seller type, with timing rules, exceptions and possible reduction. It is credited against tax; issuance of a clearance does not mean the entire advance is automatically refunded.
What is the rough total of selling costs as a percentage?
The table produces 3% only under its assumed fees and NIS 1,500 service-cost allowance. Build your budget from actual quotes, current service fees, mortgage settlement and assessed tax exposure.
Why is my net lower than a simple price-minus-mortgage figure?
Because the price-minus-mortgage figure ignores fees and taxes. The waterfall above is the honest version: it stacks every deduction in the order they hit.
Sources you can check
- PwC Israel, individual other taxes (mas shevach): https://taxsummaries.pwc.com/israel/individual/other-taxes
- Nadlan Center, capital gains and exemptions: https://www.nadlancenter.co.il/article/413
- Trustton, betterment levy explained: https://trustton.com/en/betterment-levy-what-is-it-how-is-it-calculated-and-what-are-the-implications-for-property-owners/
- Sands of Wealth, Israel property taxes and fees: https://sandsofwealth.com/blogs/news/israel-property-taxes-fees
- First Israel, mortgage prepayment penalties: https://www.firstisrael.com/blog/understanding-mortgage-prepayment-penalties-in-israel/
Ready to see your real number? Send us your sale price and mortgage balance and we will build your net-proceeds waterfall.
This number is the point of the whole exercise. Walk the full sale that produces it in selling property in Israel.
