A few months ago, the Cohen family (not their real name), new immigrants to Israel, came to the office, all excited and pleased to tell me that I could finally go ahead with the purchase of the apartment that the estate agent had found for them after months of fruitless searching.
Pleased for them, I asked them several questions to check if they were financially and mentally prepared to begin the process “of buying an apartment”, an important purchase that you need to be prepared for.
Very quickly, after asking a few questions, I realised that the Cohen family did not know, or had not considered, the additional costs of buying property in Israel. The total purchase budget was more than the sale price proposed by the estate agent.
So I carried out a detailed review of all the costs that were going to be added to the basic price and, after assessing the actual purchase cost, I prepared a plan outlining each step of the process right through to final signature.
The main costs of buying a property in Israel are as follows:
1. The estate agency : in order to find the apartment of your dreams in terms of location, price, number of rooms, an area that suits you, etc. you will need to find an estate agency to assist you with this search. Agency costs are 2% of the value of the property, excluding tax.
2. Inspection of the property : before signing the contract, we conduct a number of legal checks. Our Office also recommends that you hire a professional to perform a more thorough check of the technical aspects of the property, which is very useful for preventing future problems: illegal construction, building permits, survey, construction plans, town plan, existence of expropriation or pre-emption rights by the local authorities, etc. These costs vary between NIS 500 and NIS 1500, depending on the property. You don’t have to use a valuation expert for the preliminary inspection, but it is strongly recommended you do so.
3. Purchase tax : it is important to note that the rate may change at any time. This differs according to residence status (Israeli or foreign resident), which is why you need to consult a solicitor specialising in property.
Table of tax rates for an Israeli resident buying their first home:
|Property Value||Purchase Tax|
|NIS 0 to 1.568.800||0 %|
|NIS 1.568.800 to 1.860.790||3,5%|
|NIS 1.860.790 to 4.800.605||5%|
|NIS 4.800.605 to 16.000.015||8%|
|Over NIS 16.000.015||10%|
Table of tax rates for an Israeli resident buying an additional home or for a foreigner buying a home:
|Property Value||Purchase Tax|
|NIS 0 to 4.800.605||8 %|
|Over NIS 4.800.605 NIS||10 %|
4. Solicitor’s fees : it is important to hire a solicitor who specialises in property law and who will help you throughout the purchase process. It is advisable to find out their fees from the outset. They typically vary between 1% and 2% excluding VAT..
5. Registration fees : for the purposes of registering annotations or registering the property with the land registry, the State collects various taxes and administration fees. A detailed list of all these costs will be provided by your solicitor. The total cost varies between NIS 1500 and 2500..
Lorsque le client recourt à un prêt hypothécaire pour financer l’acquisition du bien :
6. The mortgage advisor – will take care of the whole banking procedure by offering you the best rates available on the market. Commission: between 1 and 1.5% of the amount borrowed excluding tax. You can also consult an adviser at your bank at no additional cost.
7. The costs of submitting a loan application : this is the amount collected by the bank that issues the loan. UsuallyUsually0.25% of the value of the property..
8. The valuation expert : the bank will provide you with a list of bank approved experts. One of the experts will visit the property and assess its value, which will serve as a mortgage guarantee for the bank. Rate: between NIS 1000 and 5000 depending on the location and value of the property purchased..
It is crucial to have a clear plan for buying your apartment; contact a solicitor who can provide a detailed explanation of both the financial and legal aspects of the entire purchase procedure.
The above information is not a substitute for legal advice. For any additional information, please contact us. We will be happy to answer any questions.