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Are you considering buying real estate in Israel but have some burning questions? We’re here to help! In this article, we will address some common queries potential buyers often have. Whether you’re living in a different country, wondering about the costs involved, or exploring the benefits of different types of properties, we’ve got you covered.
Can I buy real estate in Israel if I live in a different country?
Absolutely! Israel welcomes foreign investors in its real estate market. As a foreign buyer, you can take out a mortgage of up to 50% of the purchase price. What’s more, you have the flexibility to choose your preferred currency for the mortgage, including Shekels, Dollars, Euro, or Pound. The mortgage can be obtained for a period of up to 30 years or until the age of 80, providing you with various options to suit your needs.
How much do I have to put down to secure a property in Israel?
When it comes to securing a property in Israel, the required down payment varies depending on the type of purchase. For a standard purchase, you will need to put down 50% of the purchase price. However, if you’re buying a property in a new development (pre-construction project), the initial payment to secure the deal is typically between 15% and 20%. Subsequently, during the development cycle, you’ll be required to make additional payments, usually amounting to 35% to 30% of the purchase price. The remaining 50% can be financed through a mortgage and is due upon completion.
What are the additional costs that should be factored into my budget?
Aside from the purchase price, there are several additional costs to consider when buying real estate in Israel. These include:
- Purchase Tax: Foreign buyers are subject to a base purchase tax rate of 8%, which increases based on the purchase price. Israeli citizens and new immigrants may be eligible for reduced purchase tax rates, depending on the purchase price.
- Legal Fees: Lawyers’ fees typically amount to approximately 1% of the property’s value, plus VAT.
- Agents/Promoters Fee: Buyers are responsible for paying a fee to the agent or promoter involved in the real estate transaction. This fee is typically 2% of the purchase price, plus VAT.
- Government Building Index: This is effectively an interest charge imposed by the government on any outstanding funds during the construction phase of the property.
- What are the advantages of purchasing in a new development (off-plan) as opposed to an existing property?
The decision between buying a property in a new development or an existing one depends on your specific circumstances and preferences. If you’re looking to invest in a property and have no immediate urgency to move in, purchasing in a new development offers several advantages. It provides you with more time to fund the investment, allows you to have input into the design and finishes, and often offers staggered payment options. On the other hand, buying an existing property requires having at least 50% of the funds available immediately
Are there additional taxes once I own the property?
Yes, as a property owner in Israel, you have certain tax obligations. Rental income from the property is subject to a 10% income tax if it exceeds NIS 5,070 per month. Additionally, when you sell the property, you’ll be liable for a 25% capital gains tax.
Are there additional benefits if I am making Aliyah?
Certainly! If you’re planning to make Aliyah (immigrate to Israel), there are additional benefits available to you. New immigrants are entitled to a reduction in the purchase tax, which can significantly lower the overall cost of buying a property. Furthermore, Israeli citizens purchasing their first property may be eligible for higher mortgages, depending on their circumstances. It’s essential to consider the timing of taking out a mortgage in relation to your Aliyah plans, and consulting with a mortgage specialist is advisable.
Can I transfer money to Israel from abroad to an account in Israel?
Yes, as a foreign citizen, you can open an account in any Israeli bank. Currently, there are no substantial restrictions on opening such accounts. However, when transferring funds, you may need to provide information about your relationship to the account abroad from which the transfer is made.
We hope this article has shed some light on common questions about buying real estate in Israel. However, if you have any more queries or would like a free consultation, please don’t hesitate to contact us. We’re here to assist you every step of the way in finding your dream home in Israel. For your free initial appointment contact us on kim@kimbashrealestate.com today.
