When my daughters visited New York for the first time, they were stunned to see people waiting in an organized line for the bus. A rare sight growing-up in Israel; here people rush on the bus, almost in a race to see who gets on first.

There are many cultural differences between Israel and other countries. Some differences, like waiting in bus line, are evident to any tourist. Other differences, however, only become apparent after becoming immersed in Israeli life, particularly when buying a home in Israel.

When people from abroad purchase a home in Israel they should be aware of such differences to avoid surprises when they are asked to put down the money. To see how payments are different see the link at the bottom of the article. Here I would like to elaborate on some of the extra costs attached to the price of the property.

Even if a property is quoted in dollars, it will usually be paid for in shekels, and the buyer pays the difference between the dollar – shekel exchange rate

Unlike in the United States, where the seller usually pays the real estate agent around five percent of the selling price, in Israel it is customary for the buyer to pay the real estate agent a two percent commission. Add to that the Value Added Tax (VAT) which is 15.5% on top of the commission.

Buyers should never buy a property in Israel without being represented by a lawyer. In the US the contract is usually handled by the broker and the title company. In Israel the contract is almost always handled by a lawyer. Real estate agents in Israel are not even allowed to be involved in contracts. Lawyers generally take between one-half to one percent plus the Value Added Tax. More and more lawyers are willing to represent buyers for one-half percent; sometimes it depends on the deal.

When buyers transfer dollars to Israel they are expected to pay the difference between the buying and selling price of the dollar. Even if a property is quoted in dollars, it will usually be paid for in shekels, and the buyer pays the difference between the dollar – shekel exchange rate.

In Israel there is also a purchase tax for property. The amount of the tax has recently been modified according to the following scale: for a property that costs up to NIS 1,026,660, there is no tax; up to NIS 1,442,690, tax is 3.5 percent; over NIS 1,442,870, tax is five percent. For a homeowner in Israel buying another property, the tax is 3.5 percent for the first NIS 873,500 and five percent on the rest of the cost.

All in all, home buyers should figure that they will have to add about seven percent to any property they buy which will include agent’s fee, the lawyer’s fee, the foreign exchange rate difference and purchase tax. 

(for article on payments)

http://www.israelnationalnews.com/Special/Real.aspx/126363

Baruch Finkelstein is an owner/broker of Remax Center in Jerusalem. The office is in the shopping center of Ramot and Baruch has agents that service all of Jerusalem.

cell: 972-545-251-219

office:
972-2-586-9980

[email protected]

www.remax-israel.com/center