How To Purchase Real Estate In Israel

The Israeli economy is ripe for real estate investments and the country even welcomes foreign investments with open arms. While the legal policies and requirements are quite favorable, the purchase procedures are bound to be divergent from other countries. In fact, the process will vary a lot from what the foreign investor is accustomed to in his or her own country.

Following are just some of the distinctions faced in Israel when buying property:

• Ownership inquiry – Investors should clearly determine the title connected to the property and become aware of any attached obligations before purchasing any real estate. Most properties are registered with the Israel Land Registry which has offices in most big and small cities. In case the property does not feature here, you have to check the Israel Land Authority, Registrar of Pledges, Registrar of Companies or even the company that built the project. It is essential to not just ascertain whether the property is in occupied territory, but also if it has any mortgages, rights to passage, illegal buildings or other encumbrances.
• Property inquiry – It is imperative to have an appraiser or engineer physically visit the property and compare it with the building permit for irregularities in measurements, quality of construction and the like. But there is no need for an environmental report or pest inspection as such.
• Other inquiries – The onus is on the buyer to check that the land is zoned for building and not for agriculture. They should also clarify what exactly is included in the purchase price because in Israel property sale just means the bare walls, unless otherwise specified.
• Registration process – All real estate purchases have to be registered in the land registry. If the land is a privately owned one, it will be duly registered in the name of the purchaser. However, most of the land in Israel is owned by the State and such properties do not pass on to the purchaser. It is only registered as a long-term lease on the property.https://wordpress.com/posts/israelilawfirm.wordpress.com
• Title insurance – There is no title insurance in Israel. Therefore, it becomes all the more essential to diligently check the land registry and other documents to verify the actual title to the property.
• Taxes - The real estate purchase tax rate for non-Israeli investors varies from 8% to 10% depending on the value of the property. The seller also has to pay the capital gains tax and no sale will be registered until all applicable taxes are paid off. There is no inheritance tax. Rental income is taxed at either a flat 10% tax on gross rent or progressive income tax rates on the net income.

In sum, buying Israeli real estate is poles apart from what investors are used to in USA. Therefore, it makes sense to engage an experienced lawyer to represent your interests and assist you in purchasing real estate in Israeli. The professional guidance will ensure that no legal problems arise in the future!

The author is a real estate lawyer. He has written the article to highlight some important facts on the Israeli real estate that you need to consider when buying property in Israel.