by Daniel Bouzaglo 
A foreign buyer interested in purchasing real estate in Israel
can generally follow these steps:
1. Research and Market Understanding
- Property Selection: Research the type of property and location that suits your investment or living needs, whether it’s residential, commercial, or land.
- Market Study: Familiarize yourself with the Israeli real estate market, including price trends, taxes, and rental yields, as prices and demand vary significantly by area.
2. Consult a Real Estate Agent and Legal Advisor
- Real Estate Agent: Find a reputable real estate agent who can help identify properties that meet your requirements.
- Legal Representation: Foreign buyers should hire a lawyer specializing in Israeli real estate law to navigate legal requirements and contracts in Hebrew.
3. Obtain an Israeli Bank Account
- Banking Requirements: Although not always necessary, having an Israeli bank account simplifies transactions like paying taxes and utility bills. Many Israeli banks offer services for foreigners, though documentation will vary.
4. Secure Financing (Optional)
- Mortgage Options: If financing is needed, some Israeli banks offer mortgages to foreign buyers. The process may require a larger down payment, proof of income, and additional documentation. Your lawyer can guide you on specific requirements and eligible banks.
5. Negotiate Purchase Terms and Make an Offer
- Negotiate: Once a property is selected, you may negotiate terms through your agent or attorney.
- Letter of Intent: In some cases, both parties sign a non-binding Letter of Intent outlining basic terms before finalizing a purchase agreement.
6. Conduct Due Diligence
- Land Registry Check: Your attorney will conduct checks with the Israeli Land Registry (Tabu) to ensure the property has no encumbrances, unpaid taxes, or claims by third parties.
- Title Deed Verification: Verifying ownership of the property and any restrictions is essential, as some properties in Israel have specific limitations, especially if they involve land leased from the Israel Land Authority.
7. Sign a Purchase Agreement
- Draft and Sign: Your lawyer will draft or review the purchase agreement in Hebrew and ensure it aligns with Israeli property laws and your interests.
- Deposit Payment: The buyer usually deposits a portion of the purchase price, typically 5%-10%, at this stage. The balance is paid according to the terms agreed upon.
8. Registration and Taxes
- Property Registration: The purchase must be registered with the Land Registry, as well as any relevant municipal or local authorities.
- Tax Payments: Foreign buyers are responsible for:
- Purchase Tax (Mas Rechisha): A progressive tax ranging from 5% to 10% based on the property value and other conditions.
- Income Tax (if renting): If the property is rented, rental income tax will apply based on individual circumstances.
- Capital Gains Tax: If selling, capital gains tax applies to the profits.
9. Final Payment and Transfer of Title
- Completion of Payment: The remaining balance is transferred on the closing date, typically through escrow.
- Transfer of Ownership: Once payment is completed, the title deed is officially transferred to the buyer, finalizing the ownership.
10. Additional Ongoing Requirements
- Utilities and Municipal Payments: Set up accounts for utilities and pay local property taxes (Arnona) as required by the municipality.
- Property Management: For non-resident buyers, hiring a property management service can help manage rentals and maintenance.
Important Considerations:
- Currency and Exchange Rates: Real estate transactions are typically conducted in Israeli shekels (ILS), and exchange rate fluctuations may impact your total cost.
- Residency and Visa Implications: Purchasing property does not grant residency status; separate applications are required for immigration or long-term residency in Israel.
