Section 135 of the Ordinance empowers the assessing officer to demand a capital declaration. There is no form you file on your own initiative when buying.
On form 1219 you enter what you actually paid, including lawyer, notary, brokerage and improvements, not the market value.
Amounts in euros are entered in the original currency and converted into shekels at the representative rate on the date of each payment.
You file within 120 days of the demand or of the declaration date, whichever is later, signed and with supporting documents.
From 1 January 2027 the capital declaration will be filed online, under section 135(1)(a1) of the Ordinance.
Capital declaration and property abroad: the short answer
There is no rule in Israeli law under which buying property in Romania automatically requires a capital declaration. Under section 135 of the Income Tax Ordinance, the assessing officer may demand a statement of your capital and assets, and those of your spouse and children, and you file it only when you receive a demand. If you get one, the Romanian property will be included at its actual cost, including expenses, converted into shekels at the representative exchange rate on the payment date. The real preparation is an organised document file from day one.
I am not an accountant, and I will not tell you exactly when a demand will arrive. What I do know from the transaction side: those who keep their documents in order from the purchase answer a capital declaration in a week. Those who do not start hunting for three years of receipts.
What a capital declaration is, in two lines
A capital declaration is a snapshot of all your assets and liabilities on a given date, in Israel and abroad. Once there are two declarations, the Israel Tax Authority can compare them and check whether the growth in your capital is explained by the income you reported, by gifts, inheritances or loans.
The legal basis is section 135(1) of the Income Tax Ordinance (in Hebrew): the assessing officer may demand "a statement of their capital and assets" from a person, their spouse and their children. A spouse can file a separate declaration, under the conditions in the law.
A capital declaration does not check what the villa is worth. It checks where the money that paid for it came from.
Who gets a demand
According to the Israel Tax Authority's service page (in Hebrew), the people who must file are "anyone to whom the Tax Authority has sent a demand for a capital declaration". There is no form you file on your own initiative when you buy a property.
What does happen: buying property in Romania usually brings you into the annual return system, because transferring NIS 500,000 abroad or holding foreign assets above NIS 2,086,000 requires an annual return. I explained this in our article on reporting to the Israel Tax Authority. An annual return showing large transfers abroad is information in the assessing officer's hands, so it is worth assuming the question "where did the money come from" may come up.
How to report Romanian real estate on form 1219
Form 1219 has a separate section for "real estate abroad", and the instructions for filling it in contain several rules worth knowing in advance:
- Cost, not value. "State next to each asset the amount the asset actually cost you; do not state the value of the asset."
- All expenses are included. Lawyer's fees, brokerage and taxes on purchase are added to the cost. In Romania this includes the notary and registration.
- Improvements are added. Upgrades and improvements you made to the property are added to the cost.
- Buying in instalments. A property not yet fully paid for is entered at the total price, and the unpaid balance is entered separately as a liability.
- Foreign currency. You enter the amount in euros and convert it into shekels at the representative rate on the date of each payment.
Historical representative rates are published by the Bank of Israel. Someone who paid the developer in five instalments will convert five times, at five different rates.
Example: an off-plan villa, in stages
Assume you bought an off-plan villa for €300,000, paid 30% to the developer, and will finance the balance with a Romanian mortgage at handover. If a declaration date falls halfway through, in principle it would look like this:
A capital declaration does not check what the villa is worth. It checks where the money that paid for it came from.
| Line in the declaration | What you enter | How you convert |
|---|---|---|
| Real estate abroad | The total price, €300,000, plus related expenses | Each payment made, at the representative rate on the payment date |
| Liability to the developer | The 70% not yet paid | According to the form's instructions and your accountant |
| Bank account in Romania | The balance on the declaration date | In euros or lei, and in shekels |
| Romanian mortgage (after handover) | The loan balance as a liability | According to the bank balance |
The example is for illustration only. If you opened a bank account in Romania, see also our article on a bank account for non-residents. Exactly how to classify a liability to the developer before handover is a question for your accountant.
Which documents to keep from day one
This is the list I recommend opening as a single folder, digital and printed:
- The preliminary contract (antecontract) and the notarial sale contract (contract de vânzare-cumpărare).
- The land register extract (extras de carte funciară) from the land registration authority ANCPI, once the property is registered in your name.
- Transfer confirmations from your bank in Israel for every payment, with date and amount.
- Receipts and invoices from the developer, the notary and the lawyer.
- Source of funds: bank statements, sale of securities, a loan in Israel or a gift from your parents, with a document showing it.
- The Romanian mortgage contract and the repayment schedule, if any.
- Romanian tax payment confirmations, if the property is let. They are also needed for the credit in Israel, as explained in our guide to the Israel–Romania tax treaty.
Item 5 is the most important. A gift from parents with no document, or cash accumulated over years, are exactly the points where a capital declaration turns into a long conversation. Incidentally, the banks in Israel and Romania will ask for the same documents at the transfer stage, as I described in our article on transferring money to Romania.
What changes from 2027: online filing
Under section 135(1)(a1) of the Ordinance (in Hebrew), from 1 January 2027 the capital declaration will be filed online, under rules set by the Director of the Israel Tax Authority. The rules were published in 2026 under the name "Income Tax Rules (Online Reporting of a Capital Declaration)". You can already file through the online system today and attach the documents to it.
One more change worth knowing: new immigrants and senior returning residents had a ten-year exemption from reporting foreign assets in a capital declaration. Under the updated text, the exemption has been removed for anyone who became such a resident from 2026 onwards.
The deadline: 120 days
According to the Israel Tax Authority, the declaration is filed within 120 days of the demand, or within 120 days of the date for which the declaration was demanded, whichever is later. It is filed signed, complete and with the supporting documents.
Frequently asked questions
Does buying property in Romania require me to file a capital declaration?
Not automatically. A capital declaration is filed only when the Israel Tax Authority sends a demand. However, the purchase may require you to file an annual return, so it is worth being ready for questions about the source of the money.
Do I report the villa's value today or what I paid?
What you paid. The instructions for form 1219 state that you enter the actual cost, not the value, and add expenses such as lawyer, brokerage and taxes, as well as improvements to the property.
At what rate do I convert payments in euros?
Under the form's instructions, you enter the amount in the foreign currency and convert it into shekels at the representative rate on the payment date. When buying in instalments, each payment is converted at the rate on the day it was paid.
Do I need to include my spouse's and children's assets?
Yes. The declaration covers the assets and liabilities of you, your spouse and children under 18. A spouse can file a separate declaration under the conditions in the law.
How long do I have to file a capital declaration?
120 days from the demand, or from the date for which the declaration was demanded, whichever is later. From 1 January 2027, filing is online by law.
The bottom line
A capital declaration is not a penalty for buying property abroad. It is a check on the source of the money. Anyone who buys in Romania with reported money, and with organised documents, has nothing to fear from it.
If you are planning a purchase, in Balotești or anywhere else, book a 30-minute call with me. I will go through the list of documents we request and hand over at each stage of the transaction, so the file you bring to your accountant is complete.
Moti Azulay, Compass Group Romania
Sources and data: Israel Tax Authority: capital declaration, online system and form 1219 (in Hebrew) · Income Tax Ordinance, section 135, updated version (in Hebrew) · Income Tax Regulations (Exemption from Filing a Return), regulation 3 (in Hebrew) · Bank of Israel: representative exchange rates · Romanian land registration authority (ANCPI) · Israel Tax Authority.
This article is for general information only and is not legal, tax or financial advice. The guidance is based on the instructions for form 1219 and on the text of the legislation as of October 2026. How each asset and liability in your declaration is classified should be decided with an accountant or tax adviser.
Now you know more.
This article is general information, not legal, tax or financial advice. Consult local professionals before any transaction.
