US Reporting of Israeli Property and Bank Accounts
US Reporting of Israeli Property and Bank Accounts
US citizens and green card holders are generally taxed on worldwide income and must disclose many foreign financial assets. Buying a home in Israel does not by itself create a tax bill in the United States, but the bank accounts you open, the rent you may collect, a mortgage in shekels and an eventual sale can all bring reporting requirements. The rules are technical and the penalties for missing filings can be serious even when no tax is owed. This guide is not tax advice. It is an orientation to the main ideas, written so that you can work efficiently with a US CPA who understands Israeli assets.
Property Versus Financial Accounts
A directly owned foreign home is generally treated differently from a foreign bank account. Real estate held in your own name is not usually reported as a foreign financial account, but the Israeli accounts you use to buy, maintain or rent it often are.
If you hold the property through a company, trust or other entity, additional reporting may apply to the entity itself. This is one reason to decide on the ownership structure only after professional advice.
FBAR in Concept
The FBAR is a report of foreign financial accounts filed with the US Treasury when the combined value of such accounts crosses a threshold at any point in the year. For property buyers, the moment funds sit in an Israeli account before a payment can be enough to trigger it.
The FBAR is informational. It does not in itself create tax, but failing to file can carry significant penalties.
FATCA Reporting on Your Return
Separately, FATCA rules may require you to disclose specified foreign financial assets with your annual tax return when certain thresholds are exceeded. Israeli banks also report information about US account holders, which is why they ask you to certify your status when you open an account.
The FBAR and FATCA requirements overlap but are not identical, so your CPA should assess both.
Israeli current and savings accounts
Foreign currency accounts held in Israel
Accounts held jointly with a spouse or family member
Accounts of entities you control
Rental Income and Deductions
If you rent out the property, the income is generally reportable in the United States, and you may be able to deduct expenses and depreciation under US rules. Israel may also tax the same income. Foreign tax credits are designed to reduce double taxation, but how they apply depends on your specific facts.
Mortgages, Currency and Sale
A mortgage in shekels can create currency gains or losses for US tax purposes when it is repaid, even if the loan feels unchanged in shekel terms. When you sell, the gain is measured in dollars using US rules, which can differ from the Israeli calculation.
These points are among the least intuitive for American owners. Raising them with your CPA early avoids surprises at the end. Keep the loan agreement, the annual interest statements from the Israeli bank and the closing documents from both the purchase and the sale, because your CPA will need them to reconstruct the figures in dollars.
Gifts and Family Contributions
If a family member outside the United States helps fund the purchase, the receipt of a large foreign gift may need to be reported. Gifts made by US persons can also carry their own reporting. Document family contributions clearly and ask your CPA how to treat them.
Building the Right Team
Look for a US CPA or enrolled agent who regularly works with clients holding Israeli assets, and coordinate them with an Israeli tax advisor. Share your purchase documents, account details and any rental agreements with both. We are a real estate company, not tax advisors, and this page should not be relied on as advice for your circumstances.
Frequently asked questions
Do I need to report my Israeli apartment itself?
Directly held real estate is generally not reported in the same way as financial accounts, but related accounts, income and entities may be. Your CPA can confirm what applies.
What if I forgot to file in a previous year?
There are procedures for correcting missed filings. Speak with a CPA or tax attorney promptly rather than trying to fix it yourself.
Does Israel share information with the IRS?
Israeli financial institutions report information about US account holders under international agreements, so you should assume your accounts are visible.
Can one advisor handle both countries?
Some firms work across both systems, but it is common to use a US CPA alongside an Israeli tax advisor so each system is handled by a specialist.
Elkayam Group
Kobi Elkayam Real Estate Ltd, operating as Elkayam Group from Rival Street 37 in Tel Aviv, continues a family business that began in industry in the forties and has passed through three generations. Its projects range across development, urban renewal, TAMA 38 and pinui-binui, and it can structure combination deals in which backing partners provide guarantees. Its Hebrew, English and French speaking team is used to working alongside the tax and legal advisors of American clients.
Contact us and we will help you gather the transaction documents your CPA and Israeli advisors will ask for.
+972-53-658-4252 · support@kobielkayamrealestateltd.com · Rival St 37, Tel Aviv