Finance > Real Estate > Ready To Purchase Real Estate in Israel - All Those Little Things One Tends To Forget
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Article rating : 0.00, 0 votes. Author : Ted Gross
In the continuing series of articles on Purchasing Real Estate in Israel, in this installment
we will discuss all this little, annoying things that many people love to forget when they come to the final stretch and have finally decided upon a purchase or a rental.
Additional Costs Beyond The Actual Purchase Price:
1. Lawyer's Fee - (Your Lawyer should be able to give you a detailed accounting of any fee and/or tax you will be responsible for.)
2. Broker/Agent Fee - 2% set by law in Israel - Remember this has nothing to do with the possibility that the agent also represents the other side as well. Your fee is 2% + VAT.
3. Any registration fees required
4. Special Taxes for properties, land etc. that are sold over a specific amount of money.
5. Special Taxes and/or municipality fees.
*Remember in Israel, if you are a citizen, you cannot sell more than one property every four years. If you do so, you are required to pay a special tax. (Ostensibly this is to prevent land and property speculation. Nevertheless it is a fairly huge tax and if you are selling a property be aware of its existence. Unfortunately the Boston Tea Party did not take place in Tel Aviv!)
A word on taxes here. Agents are not lawyers and thus it would be unethical and downright wrong for any agent to advise you on the possible taxes that you may have to pay in either selling or buying an apartment. However, you should be aware that apartment sales are subject to a myriad of possible taxes, starting with "mas-rechisha", (tax when purchasing) and possibly "mas-shevach", (tax for bettering a property), and in commercial sales the VAT as well. Please keep this in mind when you look at your new apartment or house, especially when it is being sold for hundreds of thousands of dollars or more. Indeed, do not think that because you are a tourist, and are not a citizen, that these taxes do not apply to you , as they do (perhaps in a different scale but you still must pay tax.) So in any sale we can advise of you of the possibilities but for a clear and specific scale of exactly what tax and how much must be paid to the various governing bodies, you will need a good real estate lawyer or accountant that specializes in these areas.
The specific "mas-shevach" the tax for bettering property, is
very difficult to judge. The amount for this tax is only determined AFTER you purchase and submit architectural plans to the city for what you would like to build afterwards. So always get legal advice.
As an aside, just for those who are smiling to themselves now, thinking as many of our clients do, that they have this new and ingenious way of getting around the tax, think twice. This too should be included in your budget.
Documents you will require:
Selling:
1. Copy of Arnona (Yearly City Tax)
2. Copy of Tabu (land ownership document) - sooner or later you will have to produce it so sooner is better
3. If any external changes were made to the apartment, legal documents proving that these changes were approved by the proper authorities.
4. If you own a storage room, parking place etc. proof that it is your property.
5. In the case of land parcels have as much of the available information, including the exact size of the plot, building rights etc. available.
Purchasing:
1. Your real budget
2. A good lawyer
3. Knowing where you want to buy and what the market demands in that neighborhood
Leasing:
1. Copy of Arnona
2. Va'ad Bayit (Apartment Building Monthly Payments) responsibility
3. Heating/AC Systems
4. Dud Shemesh (Solar Heater)
Renting:
1. Be prepared to either offer two cosigners or some type of security. (The demands vary from owner to owner.)
2. Be prepared with a lawyer if you want to rent swiftly. (We do not suggest signing even a $500 rent-per-month, without a lawyer looking over the contract.)
Now take a deep breath and....
3. Understand that in almost all cases you are responsible for:
- Rent
- Arnona (City Tax)
- Vaad Bayit
- Electricity
- Phone
- Gas
- Water
- Agent's fee - in rentals one month worth of rent above and beyond the amount you owe the owner (In short term rentals between 1-6 months it is usually 10% of the overall fee.)
Make sure you know approximately how much these are BEFORE you sign the contract.
Ted W. Gross owns Virgin Earth, a real estate brokerage firm in Jerusalem, Israel. Virgin Earth represents residential and commercial real estate all over Israel. The web site for Virgin Earth is: http://www.virginisrael.com. Virgin Earth also maintains an RSS Feed on its current properties which can be found on most pages in the web site of Virgin Earth. Ted Gross can be reached at: virginearth@gmail.com. Ted Gross is also a published author and maintains a web site for his works. This can be found at: http://www.virginisrael.com/twg/iw.html
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