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In accordance with section 6 of the Land Tax Law (Appreciation and Purchase), 5723–1963 (the 'Law'), land appreciation tax is payable on the appreciation or 'capital gain' when a right in land is sold.

All references to apartment include all residential properties.

Appreciation tax is calculated as the difference between the sale price of the apartment and the price at which the apartment was purchased by its current owner, while taking into account linkage to the CPI index and the addition of allowable purchase and improvement costs of the asset (including any attorney's fee, broker's fee, renovation costs, and various expenses such as mortgage interest and depreciation etc).

Appreciation tax is currently 25% of the net appreciation created by the sale of the real estate interest (section 48A(b)(1) of the Law).

It is advisable to retain copies of the invoices of all expenses relating to the apartment as upon the sale of the apartment, these invoices may assist in reducing the net appreciation and as a result the tax that is due.

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