Real Estate in Israel

1. Buying Real Estate in Israel

Buying  real estate in Israel is complex to do alone.
There is a need to hire a lawyer because he can monitor the real estate transaction.

Your lawyer will verify any legal proceedings related to the purchase:

– Remove all  property rights of the seller in the property.

– Check if the rights are valid and clear of all wages or mortgage.

– Check the nature and the identity of the seller.

What are the costs surrounding the purchase to be paid by the buyer?

– The fee for the acquisition, varying between 0.5% and 5% ,depending on the price of the property legal issues involved.

– The commission to the real estate agent is usually
2.5% + VAT

– The charge of the parties lawyers is between
1.5% and 2% + VAT.

If the the property is sold at first hand, the buyer must also pay the “legal fees” to the lawyer of the project which is in charge of administrative formalities of the registration process.

This does not mean that the buyer is represented by his own lawyer.

Finally the real estate transaction that will be validated by the signing of a joint agreement or contract signed by both parties.

Even if the price of real estate is usually set in US dollars, it is generally calculated in Israeli shekels according to the price of the dollar published by the Bank of Israel.

2. Exemption from the capital gains tax Realty

In Israel, the gain realised as a result of the sale of a property is taxed for an individual for 20%. Nevertheless, the Israeli tax law offers tax exemptions under certain conditions.

Anyone who is entitled to obtain this exemption if it sells property every four years, even though it is the owner of several other properties on condition that meet the following conditions:

– Construction of the property sold must be fully completed at the time of sale.

– The property must be owned by an individual and not a company or a merchant of goods.

– The property must be used for residential purposes only and this for at least four years before its sale.

To qualify for the tax exemption, the owner must apply to the tax authorities at the time of sale or within 30 days after the sale.

The tax administration includes “a seller”, the spouse and minor children of the holder ie the “family unit”.

3. Finance and bank loan for Real Estate

Banking institutions allows easy access to buying property in Israel for tourists who want to invest.

Interest rates range from 4.5 to 6.5% depending on the banks.

The financing by the bank may be up to 70% of the price of the property purchased.

It is needed to pay 15% of the total amount payable on the date of signing the contract.

This payment will be deposited in trusted hands of the Advocate of the seller until all vendor obligations are carried out.

For the purchase of a new or under construction, the law prohibits the seller to collect more than 15% of the price he had been given without a bank guarantee.

At the time of handing over the keys, the balance of the remaining 15%, is then paid.

What are the conditions for obtaining a mortgage loan?

– The borrower must submit documents proving their ability to repay the loan: Records bank for the last three months, the last three pay slips (if employed), last year tax records.

– The bank asks to be given various documents in the possession of a lawyer, such as the purchase contract signed , the identity of the seller, etc.

The representation of the buyer by an agent, usually the Advocate, greatly facilitates transactions by foreign buyers.