.jpeg?w=780&h=460&func=crop)
15,650,000 | For sale
Understanding the Closing Costs of Buying a Home in Israel
When it comes to buying a home in Jerusalem or anywhere in Israel, it's crucial to have a clear understanding of the additional costs involved. The process of searching for apartments in the range of 1.5 to 2 million dollars can be daunting enough, but being fully aware of the associated expenses from the outset can greatly simplify the entire process. For instance, discovering that you can't afford the additional costs after finding an apartment you love can be quite disheartening. On the contrary, having a clear understanding of the additional costs from the beginning can significantly ease the decision-making process and prevent any unexpected financial strain.It's essential to realize that in addition to the property price, there are additional costs typically amounting to around 12-13%. Being aware of these costs upfront can prevent unwelcome surprises and help you plan your budget more effectively.
It's important to note that citizenship does not affect these costs. However, residency status may influence taxes, which is a topic for another discussion.
The primary costs associated with purchasing a property in Israel as a foreign resident include:
1. Purchase Tax: When buying a home in Israel, the general rule is that there is an 8% purchase tax. For properties over 6 million shekels, this rate is higher. Therefore, it's crucial to consider this cost when budgeting for your purchase.
2. Broker Fee: This fee, which amounts to 2% plus 17% VAT, is payable upon signing a contract.
3. Lawyer Fee: Anglo lawyers typically charge around 1% plus 17% VAT, bringing the total to a minimum of 12% when all costs are factored in.
In addition to these primary costs, there may be other expenses to consider, such as fees for a mortgage broker. If you seek financing in Israel and decide to use a broker, you can expect to pay approximately 1% of the loan amount. For instance, if you borrow 1 million dollars, your fees will amount to $10,000 plus sales tax.
Hiring an inspector can be an additional charge if you are considering purchasing a second-hand apartment. An inspector assesses the property to ensure it’s suitable before making a purchase. The cost for this inspection typically ranges around $1,000.
In addition, currency conversion costs are associated with exchanging money, which can vary based on individual cases.
Essentially, being fully informed about the additional costs involved in purchasing a property in Israel is crucial for making sound financial decisions. By understanding these costs upfront, you can ensure that you have a realistic budget and avoid any unexpected financial burdens during the home-buying process.
(This article is not data-based but rather based on Ben Levene's personal market experience and opinions. No decisions should be made without thorough due diligence and professional financial advice.)
See all our Jerusalem projects and Jerusalem Real Estate.
