FARUKI

Whenever you look to buy or sell a property in Israel you take into account the price you must pay (or the price or will receive - if you are selling) when making this deal, but there are expenses, some of them unexpected, that need to be taken into account.

In Israel, there is a purchase tax - this is paid by the buyer and is between 3.5 and 5% of the price of the property. Residents of the country pay one half percent less if this is the only property that they own.

However, if a man wishes to buy a property in Israel, and his wife owns another property, he will have to pay a higher tax rate as if he already owns a property. When a transaction is taking place within the family, and the money is not “changing hands”, the purchase tax is 1/3 of the normal rate.

A sales tax is also assessed on property sales in Israel. The seller has to pay this tax, which is either 2.5% of the purchase price of the property, or .08% of the purchase price in the case of residential properties being sold by contractors. This tax is often not charged if the seller is an individual instead of a corporate entity.

The commission in Israel is payable by each of the sides of the transaction (both seller and buyer). A good agent will save you more money than he costs, as he has a wealth of experience which will help you make the right decisions. The customary brokerage commission payable is: On the purchase or sale of property, 2% of the inclusive price of the property. On leasing property for a period of one year or more, one month of rent. Value Added Tax (VAT) is added to any commission due (17%). Payment of the full commission is due on the signing of a binding agreement to purchase or lease a property.

Real estate lawyers have a fee of 1.5% plus VAT when buying a first-hand property from a contractor. This will go to the contractor’s lawyer for legal fees. When you buy a property not first hand the lawyer on your behalf will take between 0.5% and 1% plus VAT.

A property inspection engineer (who you may want to bring in to have a look at the property especially if it is a used property) will charge between $400-$500 USD on average; though this may be a little more or less depending on the property’s size.

Payments for property purchases in Israel are generally made in Israeli Shekels (NIS). When converting from other currencies to Shekels, banks typically charge a fee of somewhere between .01% and .05% of the amount being converted to Shekels.