Summary of closing costs when purchasing a property in Israel:

Closing costs range between 5% and 7% of the cost of the property. This should not be overlooked when applying for a loan.  Also take into consideration the VAT (Value Added Tax) from the Israeli Government is 18%.

Lawyer’s Fee

Your lawyer will ask for 0.5% – 1% plus VAT on the amount for the property to draw-up the contract and register your home.
He/she may add other expenses if you live overseas. It is important that the lawyer be knowledgeable about the city in which you are buying your home (it is not recommended to use a friend or family member.) We can recommend a suitable English speaking lawyer who is an expert in Real Estate Law in the area that you are buying.

It is not uncommon in second hand transactions for the parties to use the same lawyer to save costs. Make sure that the lawyer is completely unbiased toward either party.

Agent’s Commission

The agent charges 2% plus VAT. This is the standard charge in Israel. A good agent will save you more money than the commission you pay  They know which home owner is keen to sell and which properties would be best according to your needs. Thus he /she will save you a lot of time and energy by taking you to the right properties.

Mortgage Broker

If you choose not to shop around the various banks and financial institutions here in Israel than using a Mortgage Broker may be the best option for you.

There are many mortgage options available in the real estate market today.  Such examples are standard fixed rate loans (10/15/20/30 year) and interest rate loans (linked to USD/Euro/Shekel)  A mortgage broker works independently of the banks to determine the most suitable mortgage for a particular client and to negotiate the most competitive rates and terms available. A mortgage broker also helps clients build their application, tailor made to each mortgage lender’s criteria, to ensure the best chance of approval.
The fee charged is 1% + VAT of the amount of the mortgage taken.

Engineer / Surveyor

Should you wish, you can have the property checked by a qualified engineer or surveyor before you purchase the property.   They will prepare a written report and the cost is about $500 USD depending on the size of the property.  In most cases this whole procedure will take a couple of days.

Purchase Tax

This tax is payable within 50 days of signing the contract. You can arrange with the lawyer to pay it all at once or in installments.

Purchase Tax Levels from 1/1/2015

Single Residential Apartment or House for Israeli Residents

This is for the purchase of a residential apartment or house when the property purchased is the purchaser’s only apartment in Israel.  This includes a situation where a new apartment or house is purchased instead of the existing
one.  Even though the existing property has not been sold yet the tax authorities give the purchaser 24 months to sell his or her existing apartment.

 For the portion of the price until 1,568,800  NIS 0%
 For the portion of the price from 1,568,800  NIS until 1,860,790 NIS 3.5%
  For the portion of the price from 1,860,790 NIS until  4,800,605  NIS 5%
For the portion of the price from 4,800,605  NIS until 16,002,015  NIS 8%
For the remaining portion of the price above 16,002,015  NIS 10%

 

Foreign Resident/Investor/ 2nd purchase for Israeli Resident

This is when the Israeli purchaser purchases another apartment or house without selling his or her existing one within 24 months of the purchase on the new property or a foreign resident purchases his/her apartment or house.

From the 1/1/2015 till 30/6/2015

For the portion of the price until 1,162,120  NIS 5%
For the portion of the price from 1,162,120  NIS until 3,486,350 NIS 6%
For the portion of the price from 3,486,350 NIS until 4,800,605  NIS 7%
For the portion of the price from 4,800,605  NIS until 16,002,015  NIS 8%
For the remaining portion of the price above 16,002,015  NIS 10%

 

From the 1/7/2015 till 15/1/2016

For the portion of the price until 1,126,475  NIS 3.5%
For the portion of the price from 1,126,475  NIS until 4,800,605 NIS 5%
For the portion of the price from 4,800,605 NIS until 16,002,015   NIS 8%
For the remaining portion of the price above 16,002,015  NIS 10%
   

 

New Olim

This is for new Olim within the first 7 years after making Aliya.  This partial exemption is only given once.

From the 16/1/2015 till 15/1/2016

For the portion of the price until 1,700,220 NIS 0.5%
For the remaining portion of the price above
1,700,220 NIS
5%

 

Life & Property Insurance

You have to, by law, take out a life insurance policy, so that the bank can be fully repaid should one of the parties pass away.
You also have to take out a property insurance policy in order to receive a mortgage. The bank automatically signs you up on an insurance plan if you do not already have one in place.   In most cases you can save a lot of money if you sign up for an insurance plan outside of the bank.