Tax Planning

Donating Appreciated Assets? There's a New Tax Break for That

The Israeli Tax Authority has published a new procedure that lets donors transfer capital assets to registered nonprofits without paying capital gains tax, while still claiming the usual income tax credit of up to 35%.

Who this matters for: shareholders or asset owners whose holdings have appreciated significantly, and who want to make a meaningful donation.

📋What changed

Until now, donating shares or real estate to a nonprofit triggered capital gains tax (25%) for the donor — even though the donor never actually received the gain in cash. Under the new rule, when a donation meets certain conditions (below), the donor is fully exempt from that capital gains tax, and can still claim the income tax credit under Section 46 of the Income Tax Ordinance on top of it.

✅The main conditions

• The donation goes to a nonprofit approved under Section 46.
• The donor receives no consideration or benefit in return (including publicity or usage rights).
• The value of the donation is assessed by a professional appraiser.
• The asset is actually transferred during the tax year.

🧮A worked example

Say you hold shares currently worth NIS 500,000, originally purchased for NIS 100,000 — an unrealized gain of NIS 400,000.

Same donation, nearly double the combined tax benefit — and the nonprofit receives NIS 100,000 more.

🎯Who this is especially useful for

• Owners of private or public company shares sitting on unrealized gains
• Donors who want to make a substantial gift to a nonprofit
• Individuals or companies with significant capital gains tax exposure
• Anyone looking to combine meaningful giving with smart tax planning