Paristlv.com - How to buy in ISRAEL

How to buy in ISRAEL

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Short Guide for your first steps on the Israeli Real Estate Market by www.paristlv.com

David Boccara

Manager of Israel

Asset Management and Chairman of the Commission "Real Estate" in the Chamber of Commerce Israel France.

The Israeli real estate market has its own legal rules, tax legislation and a price determination set according to the square meter.

We place at your disposal this short guide in order to help you at each step of your plan: looking for financing, buying a property and managing it.

	Buying a Property
	1. Property Tax 3 tranches of 0.5%, 3.5% and 5% of the purchase price. The 0.5-tranche is suppressed for the tourists and the 3.5-tranche is suppressed for new immigrants. This tax must be payed to the Israeli tax authorities within 50 days. GOOD TO KNOW: The advantage granted to new immigrants can have a retroactive effect if the Alyah has been done until one year after the purchase. This tax is 5% for lands and 3.5% for commercial properties (shops and offices). 2.Lawyer's fees Usually about 1% + VAT (17%) of the price of the purchased property. These fees are fixed by a contract between the buyer and the lawyer and must be payed when the contract is signed (there is one and only "authentic" contract in Israel - no "commitment to sell", the cadastral statement is available within 24 hours). WARNING: For new projects, the property developper often binds you to pay his/her lawyer for the "registration fees" and you may think this lawyer will defend your interests ... NO WAY!!! Actually this lawyer is not payed by the property developper during the setting of the project and your payment will pay for the legal services he/she did to the PROPERTY DEVELOPPER. Therefore you must ALWAYS hire YOUR OWN lawyer who will defend YOUR interests during the negociation and the achievement of the contract. 3. Agency's fees 2% + VAT of the purchased property's price, all taxes included (for a classical job of real estate agent). In Israel the usual rule is that the seller pays 2% + VAT to the real estate agent, and the buyer pays 2% + VAT to this real estate agent, so a total amount of 4% + VAT if there was not any "inter-legal office" between the agencies ; which is the case most of the time. The job of real estate agent is regulated by the Israeli Law and one must have a professional card. A GOOD PIECE OF ADVICE: when you enter the real estate market looking for a property, it is not judicious to contact all the agencies in order to "comb as much as possible". As the market is limited and everyone knows each other the agencies may get blunted and think that "it doesn't worth anything to invest time on your research as everybody works on it in competition". It is often more productive to ask exclusively for the services of one agent - and you must choose THE GOOD ONE - who will make a great effort for you and will contact himself all the other agencies which will almost never refuse to cooperate "between agencies". Thus you will have achieved your aim: on the one hand ONE agent who really and entirely works for you, as he knows his efforts will be rewarded, and on the other hand the access to all the properties you may like!!! Moreover in the case of a complete coaching for the purchase (contract back end, interface with the lawyer, setting of the timing of payments, intake of the property, financial elaboration, setting of bank loans if necessary, payments, etc.), one must add advising and representation fees of about 2% + VAT of the purchased property's price, all taxes included. NOTE: This job is rare in Israel but it is actually Israel Asset Management group's SPECIALITY!!!
	Day to day Management of your Property
	1. Arnona The Arnona is the equivalent of the inhabited house duty which is payed to the Municipality (and enables to finance the municipal services). It is calculated according to the NET inhabitable surface of the apartment (for instance about 65 NIS/m² a year in Jerusalem) ; the amount varies according to the city. Usually it is more than the quadruplet for offices and shops. This tax is payed by the tenant when the property is rented. GOOD TO KNOW: You can enjoy a discount of 90% the first year if you are a new immigrant, a total exemption for 6 months if you prove that the property is empty and an exemption during the renovation (if you provide official vouchers). 2. Union Charges (or Vaad Bayit) This is the repartition of the housekeeping charges of joint parts (elevator, electricity, cleaning, gardening, insurance, etc.). Most of the time the co-ownership elects voluntary representatives living in the building and who will have to pay the services suppliers and the charges between co-owners. These charges amount to about 100 to 200 NIS a month for a voluntary union in a classical building. However these charges may be higher in case of residences, new or recent, with a housekeeper, a swimming pool, a sport hall, etc. since it is very often a professional company which manages it all for costs that may amount to 4$ a square meter! Union fees are paid by the tenant when the property is rented. 3. Agencies charges for the look for a tenant: 1 month rent + VAT Usually the real estate agent gets 1 month + VAT from the lessor and 1 month + VAT from the tenant. This does not include charges for the setting of the contract which may amount to 1 month + VAT (lawyer of professional representative). 4. Management Fees They depend from the mission which will be defined: from 5% duty free (for a classical management such as "estate administrator" in France) to 10% (for a complete management, including management of the bank account and refunding of loans, and even of the owning company) of the rents collected.
	Possibilities of Bank Financing
	There are various financing options if you do not have the whole amount needed to purchase the property. The rate of proper funds usually required by the bank varies between 35 and 50% according to the banks and the features of the brief. (There is an option for a credit until 90%, but it is more expensive as it is offered by an American insurance company that actually gives a guaranty to the bank concerning the balance and invoices an insurance premium). The period to reimburse the credit may vary from 5 to 30 years and the monthly payment will be fixed according to the duration of the credit. You can borrow in $ at varying rate, Libor + X% or in NIS. A GOOD PIECE OF ADVICE: It is usually recommended to link one's credit to the reimbursement currency: to the $ if the tenancy contract is in $, or in NIS if one is employed in Israel ; in order to prevent any exchange speculation.
	The square meter in Israel
	In Israel, one buys "rooms" or rather "a volume" and not square meters. If someone speaks about surface, he/she will speak about gross surface which includes exterior walls, and for new properties a proportion of joint parts.

David Boccara pour www.paristlv.com

Parcours de David Boccara

David BOCCARA funded and manages Israel Assets Management, the Consulting firm in real estate investment in Israel.
He is 37 years old, is married and has 4 children.
Graduated from the Superior School of Commerce of Reims in 1990 (major).
After 4 years of experience on the Parisian real estate market at Auguste-Thouard dealing with buildings trade-off,
12 years of experience on the Israeli real estate market as manager of an investment company.
Chairman of the Commission Real Estate in the Chamber of Commerce and Industry Israel-France.
Consultant in real estate investment, properties and companies administrator, specialised in financial and transactions elaboration.
His mother tongue is French, he is perfectly fluent Hebrew and also speaks English and Spanish.

Consultant in real estate investment: define the product that is searched, search the product, negociate, elaborate the purchase, financing, renovation and rent, sell.

Le contacter :
Email : david@iam.co.il
Phone number : (972) 2 673 10 10
Mobile Phone : (972) 50 546 45 89

Currency rate EUR-USD:1.3182 ILS-EUR:0.194 ILS-USD:0.2558 EUR-ILS:5.154 USD-ILS:3.9098 Convert Loan simulation

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How to buy in ISRAEL

Short Guide for your first steps on the Israeli Real Estate Market by www.paristlv.com

The Israeli real estate market has its own legal rules, tax legislation and a price determination set according to the square meter.

We place at your disposal this short guide in order to help you at each step of your plan: looking for financing, buying a property and managing it.

Buying a Property

1. Property Tax

3 tranches of 0.5%, 3.5% and 5% of the purchase price. The 0.5-tranche is suppressed for the tourists and the 3.5-tranche is suppressed for new immigrants.

This tax must be payed to the Israeli tax authorities within 50 days.

GOOD TO KNOW: The advantage granted to new immigrants can have a retroactive effect if the Alyah has been done until one year after the purchase.

This tax is 5% for lands and 3.5% for commercial properties (shops and offices).

2.Lawyer's fees

Usually about 1% + VAT (17%) of the price of the purchased property.

These fees are fixed by a contract between the buyer and the lawyer and must be payed when the contract is signed (there is one and only "authentic" contract in Israel - no "commitment to sell", the cadastral statement is available within 24 hours).

3. Agency's fees

2% + VAT of the purchased property's price, all taxes included (for a classical job of real estate agent).

In Israel the usual rule is that the seller pays 2% + VAT to the real estate agent, and the buyer pays 2% + VAT to this real estate agent, so a total amount of 4% + VAT if there was not any "inter-legal office" between the agencies ; which is the case most of the time.

The job of real estate agent is regulated by the Israeli Law and one must have a professional card.

NOTE: This job is rare in Israel but it is actually Israel Asset Management group's SPECIALITY!!!

Day to day Management of your Property

1. Arnona

The Arnona is the equivalent of the inhabited house duty which is payed to the Municipality (and enables to finance the municipal services).

It is calculated according to the NET inhabitable surface of the apartment (for instance about 65 NIS/m² a year in Jerusalem) ; the amount varies according to the city.

Usually it is more than the quadruplet for offices and shops.

This tax is payed by the tenant when the property is rented.

GOOD TO KNOW: You can enjoy a discount of 90% the first year if you are a new immigrant, a total exemption for 6 months if you prove that the property is empty and an exemption during the renovation (if you provide official vouchers).

2. Union Charges (or Vaad Bayit)

This is the repartition of the housekeeping charges of joint parts (elevator, electricity, cleaning, gardening, insurance, etc.).

Most of the time the co-ownership elects voluntary representatives living in the building and who will have to pay the services suppliers and the charges between co-owners. These charges amount to about 100 to 200 NIS a month for a voluntary union in a classical building.

However these charges may be higher in case of residences, new or recent, with a housekeeper, a swimming pool, a sport hall, etc. since it is very often a professional company which manages it all for costs that may amount to 4$ a square meter!

Union fees are paid by the tenant when the property is rented.

3. Agencies charges for the look for a tenant: 1 month rent + VAT

Usually the real estate agent gets 1 month + VAT from the lessor and 1 month + VAT from the tenant. This does not include charges for the setting of the contract which may amount to 1 month + VAT (lawyer of professional representative).

4. Management Fees

They depend from the mission which will be defined: from 5% duty free (for a classical management such as "estate administrator" in France) to 10% (for a complete management, including management of the bank account and refunding of loans, and even of the owning company) of the rents collected.

Possibilities of Bank Financing

There are various financing options if you do not have the whole amount needed to purchase the property.

The rate of proper funds usually required by the bank varies between 35 and 50% according to the banks and the features of the brief.

(There is an option for a credit until 90%, but it is more expensive as it is offered by an American insurance company that actually gives a guaranty to the bank concerning the balance and invoices an insurance premium).

The period to reimburse the credit may vary from 5 to 30 years and the monthly payment will be fixed according to the duration of the credit.

You can borrow in $ at varying rate, Libor + X% or in NIS.

A GOOD PIECE OF ADVICE: It is usually recommended to link one's credit to the reimbursement currency: to the $ if the tenancy contract is in $, or in NIS if one is employed in Israel ; in order to prevent any exchange speculation.