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Non Israelis – 10 Essential Tips When Purchasing Residential Property in Israel

Non Israelis - 10 essential tips when purchasing residential property in Israel

Purchasing a residential property is generally one of the most profound, expensive and important decisions you make in your life. Even more so when purchasing a residential property in Israel. Following is a check list containing 10 most important tips on how to do it the right way:


1. Locating the right property

There are a few ways to proceed. The first way is via various web sites, which usually do not involve payment of a fee. Another way that is more common is via a real estate agent. It is important to confirm that the agent has a valid real estate license and is proficient in English. You must be aware that purchasing a property using a real estate agent increases the costs of the transaction as the agent’s fees range between 1% to 2% (V.A.T exclusive) of the purchase price. However, this extra cost can prove to be worthwhile, especially when dealing with a professional, experienced agent who has a thorough knowledge of the property market.


2. What to buy

It is important to understand what you want to buy, for example a house or an apartment, whether to buy an apartment off plan (or under construction) from a contractor or to buy a finished apartment. Your choice to buy an apartment or a house can have important consequences. It is also important to know that when purchasing an apartment from a contractor (off plan or under construction) there may be many unforeseen problems (such as late delivery, structural defects, financial problems of the contractor etc.). But the advantage of buying an apartment from a contractor is a lower purchase price (approx. 15%) when compared to a pre-existing property. Also, you can buy the apartment in a “shell” condition and design it to fit your personal requirements.


3. Property inquiry

It is very important to engage an engineer or similarly qualified professional. to check the quality of construction and to make sure there are no building irregularities. If you wish to buy a house it is important that you have its size measured to ensure that the correct specifications are recorded with the authorities, such as the Land Registry.


4. Engaging with the right lawyer 

It is extremely essential that you engage a competent, experienced lawyer to represent you. It is vital that you are guided and assisted throughout the process, from the negotiation stage until the conclusion of the transaction, by a lawyer who will both protect and advance your interests. The lawyer’s fees generally range between 0.5% to 1.5 % (V.A.T exclusive) of the purchase price.


5. Financing

The purchase price for the property can be paid fully in cash or via a combination of cash and mortgage finance. Usually the lender will grant a non-resident a loan which will not exceed 50% of the purchase price. Receiving approval for mortgage funding from local banks for non-residents cannot be taken for granted and is not always successful.


6. Signing the contract

It is important to know that the provisions of the contract are negotiable and are not “cast in stone”. All the necessary legal checks should be carried out prior to the signature of the contract. For example, whether there any existing property mortgages, foreclosures or anything else that could affect the transaction. It is important to ensure that the structuring of payments under the contract is reasonable and attainable.


7. Receipt of possession

It is also very important that at the time of delivery of the property the seller and buyer have drawn up a delivery protocol, which will specify any defects which need to be remedied by the seller. At the time of delivery you should arrange for the transfer of all utilities, rates accounts into your name.


8. Taxes

Currently, non-residents are required to pay purchase tax of 8% of the purchase price up to NIS 4,896,165 and 10% of the purchase price which exceeds NIS 4,896,165.


9. Opening a bank account

In recent years the requirements for opening a bank account by non-residents have become quite stringent. The bank requires the foreign resident to sign a waiver of confidentiality towards the Bank, a statement about the place of residence and a deposit of a cash amount in the account. Alternatively, you can arrange for your lawyer to open a trust account to effect payments. Please note that opening a trust account will entail the signing of similar documents as are necessary when opening a personal bank account.


10. Post Purchase Issues

(I) Receipts – Upon a subsequent sale of the property, you may have to pay Capital Gains Tax. However, for this purpose you are entitled to deduct various expenses, such as renovations, purchase taxes, legal fees, agent’s fees etc. It is therefore critical that you retain all relevant receipts, which must be under your name and must include all relevant details relating to the property and of course, keep a copy of all taxes paid upon the purchase as well as the purchase agreement and your passport.

(II) Insurance – You must insure the property and its contents. Non-residents who do not intend to occupy the property on a continuous basis should ensure that someone inspects the apartment once every two weeks, otherwise the premiums will be more expensive and in some cases insurance cover may be refused.

(III) Taxes – If you intend to rent out your property to a third person, you have a duty to report your income to the Israel Tax Authority if the rental exceeds approx. NIS 5,070 per month.



If you have any queries, please contact Adv. Liat Keisary. Liat provides a wide range of legal services tailored to the exclusive needs of high-net-worth individuals and their families. In this context, Liat handles a variety of real-estate transactions, including the acquisition and disposition of luxury residential.


Source: barlaw.co.il