The Process of Buying Property in Israel

Buying property in Israel can be rewarding – but also challenging. It will benefit you to work with a law firm that has experience with handling the intricacies of Israeli real estate transactions on behalf of individuals and families that are planning a move to Israel as well as on behalf of foreign investors who are interested in acquiring assets in the Israeli real estate market. A knowledgeable attorney will know how to avoid the many pitfalls that buyers can encounter in an Israeli real estate purchase and take steps to ensure that the transaction moves forward as smoothly as possible.

With offices in New York, Florida, Los Angeles, and Tel Aviv, Aharoni Law Firm can provide the legal guidance and representation that you need. Our founding attorney, Rahav D. Aharoni, is an Israeli native with more than two decades of experience in Israeli real estate transactions, evaluations, and contracts. He will personally oversee every aspect of your case and ensure that we meet all of your goals. Please contact us today for a complimentary consultation and learn more about how Aharoni Law Firm can assist you.

What Types of Property Are Available in Israel?

If you are a foreign citizen, your first step in buying property in Israel will be to understand the different types of property within the country. Israeli real estate falls into two general categories:

State-owned land (Israeli Land)

This type of property is owned by the State of Israel and administered by the Israel Land Administration (ILA). Roughly 93% of Israeli land falls in this category, The Jerusalem Post notes. It includes land owned by the Development Authority as well as the Jewish National Fund. Several restrictions apply to property in this category. If you are seeking to buy or lease state-owned land in Israel, Aharoni Law Firm will advise you of your options.

Privately Owned Land

The laws that apply to this type of property are much less restrictive than those that apply to state-owned land. Generally, private property owners can sell the property to others, regardless of whether they are Israeli citizens or foreign citizens, Jewish or non-Jewish. This property can include previously owned homes or apartments as well as newly developed housing. Most of the real estate transactions that we assist clients with at Aharoni Law Firm involve privately owned property.

Can a Foreign Resident Buy Property in Israel?

If you currently live in the United States, Canada, United Kingdom, or any other country, you can purchase privately owned property in Israel. You will not need to travel to Israel to make the purchase. However, you will need to sign the purchase contract in Hebrew and your language, a Power of Attorney form, and an Israel Acquisition Tax Rate form. You can do this at any Israeli Consulate in your country of residence. You will also need to sign all documents in front of a certified translator. Additionally, an Israeli-licensed lawyer will need to execute all of your transactions and business on your behalf.

What Are the Purchase Costs of Buying Property in Israel?

You can face numerous types of purchase costs when you buy property in Israel, including real estate agent fees, inspection fees, and mortgage fees. One of the biggest costs will be the acquisition tax (or “purchase tax”) that you pay in New Israeli Shekels (NIS). If you are a foreign citizen, this tax may be higher than what an Israeli citizen would pay for property with roughly the same value. You must typically pay this tax within 60 days of signing your contract of purchase.

The acquisition tax rates are based on the total purchase price of the property. The rates are adjusted every January to reflect the Israeli Consumer Price Index.

Your lawyer from Aharoni Law Firm will advise you of the current acquisition tax rate that will apply to your purchase.

What Do Non-Residents and New Olim Need to Know When Buying Real Estate in Israel?

Israeli Purchase Tax Rates for Non-Residents Updated to of January 16, 2023, up to January 15, 2025

• There are two tax brackets for a foreign resident (updated as of January 16, 2024, and valid until 2025):
  • 8% – applies to the portion of the property value up to ₪ 6,055,070 ($1,733,140 as of April 26, 2024)
  • 10% – applies to the portion of the property value exceeding ₪ 6,055,070 ($1,733,140 as of April 26, 2024) (and up to and including the total property value)

Israeli Purchase Tax Rates for Residents and New Olim  Updated to of January 16, 2023,  up to January 15, 2025

• Rates are progressive and depend on the purchase price of the property.
• You will pay no tax on the portion of the property’s value up to ₪ 1,978,745 (around $568,880 as of April 26, 2024).
  • A 3.5% tax rate applies to the portion of the value between ₪ 1,978,745 and ₪ 2,347,040 (around $672,200 as of April 26, 2024).
  • A 5% tax rate applies to the portion of the value between ₪ 2,347,040 and ₪ 5,872,725 (around $1,683,420 as of April 26, 2024).
  • An 8% tax rate applies to the portion of the value between ₪ 6,055,070 (around $1,733,140 as of April 26, 2024) and ₪ 20,183,565 (around $5,790,420 as of April 26, 2024).
  • A 10% tax rate applies to any portion of the value exceeding ₪ 20,183,565 (around $5,790,420 as of April 26, 2024).

Notes:

• Families who are planning to make Aliyah do not need to complete the Aliyah stage, they will be credited at the end of the process.
• These rates are valid from January 16, 2024, to January 15, 2025.
• The tax brackets are updated annually.

It’s important to note that Israeli real estate law defines a single homeowner as one who owns less than 33% of an initial property in or outside of Israel. You will be deemed to be a multiple homeowner if you own more than 33% of the property in or outside of Israel.

Additionally, you can qualify for the reduced tax rate for up to seven years of aliya, or if you buy your property within one year before making aliya. If you are married, you can be eligible for the lower acquisition tax rate if either you or your spouse becomes an Oleh.

What Should You Consider Before You Buy Property in Israel?

Before you buy property in Israel, you should consider several factors. Some of those factors include:

• Local housing prices,
• Nearby schools,
• Availability of public transportation,
• Local business climate,
• Municipality tax rates,
• Potential property value appreciation.

If you are an English speaker (or still in the process of learning Hebrew), you may find it easier to adjust to your new home if you live in an urban area such as Jerusalem, Tel Aviv, or Haifa. However, you may also find an exciting opportunity in a Moshav, Kibbutz, or Garin in a rural setting.

In addition to handling your legal needs, Aharoni Law Firm can assist you with finding local resources that will help you find the property that meets your goals and ease your transition. We can also assist with finding the right mortgage for your situation and the transfer of funds from abroad to complete your purchase. This high level of service is among the many advantages that come from working with a law firm that has a deep background in Israeli real estate transactions.

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How Does Property Registration in Israel Work?

The most important step that you will take in the purchase of an apartment, home, or other property in Israel will be to properly register the property in your name. Registration will allow legal rights to the property to be transferred from the seller to you as the buyer. Without it, the transfer of ownership rights will not be complete.

If you buy privately owned property, then you will do this through the Israeli Land Registration Office, which is commonly called “The Tabu.” The registration process works differently if you buy property that is still in the process of being developed, or if the land is state-owned.

To register the property with The Tabu, you will need to submit the registration in the office where the property is located. The Tabu has nine Land Registration offices, or bureaus, which are located in Jerusalem, Tel Aviv, Haifa, Petach-Tikva, Nazareth, Netanya, Beersheba, Holon, and Rehovot. It also has two extension offices in Hadera and Acre. Once registration is complete, the office will issue a Tabu deed (title).

The registration process can be a lengthy one. It may take several months to complete. For this reason, after you sign the purchase contract, you should register a cautionary note. This note will protect your rights as a buyer against anyone else who may try to assert a right regarding the property. For instance, if one of the seller’s creditors attempts to impose a lien on the property after you have registered a cautionary note, the lien will not be recognized. A cautionary note can also prevent multiple sales of the same property.

Aharoni Law Firm can handle every aspect of the registration process on your behalf, including the registration of a cautionary note. Additionally, before you buy the property, we can research the record for the plot (or sub-plot) in the Land Registry. This information can include:

• The property’s current registered owner,
• The registered size and dimensions of the property,
• Any liens, mortgages, easements, rights of use, and/or passage or appropriations by public authorities on the property.

It will be important to have a signed and authenticated Land Registry Deed (Tabu) Extract before you buy any property in Israel. This is the only official extract.

Aharoni Law Firm Focuses on Israeli Real Estate Law

With our deep background in Israeli real estate law, Aharoni Law Firm can provide a variety of services to our clients, including:

• Searching the legal rights and title connected to the property through the appropriate registry (or registries) and gathering all relevant documents, including the official extract, before you purchase the property.
• Providing help with obtaining and negotiating the terms of a mortgage, including a mortgage for a second home in Israel.
• Preparing contracts for the purchase or sale of real estate in Israel, including handling all negotiations and signing procedures.
• Registering and transferring all property rights under all relevant Israeli authorities.
• Providing legal representation in an Israeli court if any disputes arise related to land, title, and real estate.

We take pride in providing highly skilled and personalized service to our real estate clients in Israel as well as in the United States (New York, Florida, California), Canada, the United Kingdom, and countries around the globe. To discuss how we can assist you with purchasing property in Israel, please call or reach us online today. We will review your objectives in a complimentary consultation and discuss how we can help you meet all of your real estate goals.

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Contact An Israeli Real Estate Attorney for A Free Consultation

It is recommended that any family or individual considering buying or selling real property in Israel consults with an experienced attorney who is familiar with Israeli property, property management, and Israeli real estate laws.

Aharoni Law Firm represents international clients from the United States, Canada, the UK, Europe, and Israel.

Please contact us from the US or Canada at 888-923-0022 or in Israel at (972) 3.9055478 or (972) 50.7322688 to schedule a discussion regarding your potential purchase.

In Conclusion:

• Engaging with an attorney is crucial due to the complexities of Israeli real estate law.
• Foreign residents can buy privately owned property in Israel, not state-owned land.
• Acquisition tax is a significant cost, with rates varying for residents and non-residents.
• Property registration is essential to secure legal ownership.
• We at Aharoni Law Firm offer comprehensive legal services to facilitate property purchases in Israel.