Do foreign co-owners have to pay Israeli tax when a co-owned property is sold?

Yes. A court-ordered forced sale or any private sale of co-owned property in Israel triggers Israeli betterment tax (mas shevach) on each co-owner's proportional gain. Non-residents are not exempt — Israeli property is always taxable in Israel regardless of where the owner lives. Each co-owner must file their own betterment tax return and obtain a tax clearance certificate before their share of the proceeds can be released.