Who can buy property in Israel?

Foreigners are permitted to purchase properties in Israel, and their rights as property owners are almost identical to those of Israeli citizens. No special authorization from Israeli governmental institutions is needed for foreign nationals to buy property. The process is generally managed through real estate agents and attorneys, making it straightforward for non-residents to navigate.

It's important to note that the majority of land in Israel is state-owned and is usually leased rather than sold outright. Lease terms typically span between 49 and 99 years, with the option to renew. While foreigners can own structures on leased land, the lease arrangement is a key aspect of property ownership in Israel.

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Investing in Israeli real estate offers several attractive advantages. Israel's economy is strong and resilient, supported by a booming tech sector, stable governance, and steady population growth, which creates ongoing demand for residential and commercial properties. Major cities like Tel Aviv and Jerusalem have seen consistent property value appreciation due to limited land availability and high demand, particularly for high-end properties. Israel’s real estate market is also attractive for investors seeking long-term returns, as it has demonstrated stability even during global economic fluctuations. For foreign investors, Israel offers a straightforward legal framework for property ownership, and the country’s strategic location in the Middle East enhances its appeal as a real estate investment destination.

Here are some sought-after destinations for real estate investment in Israel:

• Tel Aviv - As Israel's financial and technological hub, Tel Aviv is a prime destination for both residential and commercial real estate investment. Popular neighborhoods like Rothschild Boulevard, Neve Tzedek, and Florentin are known for their modern lifestyle, trendy amenities, and cultural vibrancy. The city offers high-end apartments and luxury condominiums, making it a top choice for both local and foreign investors.
• Jerusalem - Known for its historical significance, Jerusalem attracts investors interested in both residential properties and commercial real estate. Neighborhoods like Rehavia, Talbiya, and the German Colony are particularly popular due to their unique architecture and proximity to the Old City. Jerusalem appeals to those looking for a blend of tradition and modernity, making it a desirable location for long-term investments.
• Herzliya - Situated on Israel’s central coastline, Herzliya is renowned for its beautiful beaches and upscale residential areas. Herzliya Pituach, known for its luxury villas and high-end apartments, attracts foreign investors seeking beachfront properties. The city's proximity to Tel Aviv, coupled with a more relaxed atmosphere, makes it ideal for both vacation homes and permanent residences.
• Haifa - Located in northern Israel, Haifa is a significant port city known for its blend of culture and industry. Real estate in areas like the Carmel District and the German Colony appeals to those looking for affordable housing options with scenic views of the Mediterranean Sea. Haifa's growing tech and industrial sectors also make it an attractive location for commercial investment.
• Netanya - Netanya, a coastal city, has become a popular destination for retirees and second-home buyers. The city boasts a mix of beachfront properties and new residential developments, particularly in neighborhoods like Poleg and Kiryat HaSharon. With its growing population and tourism sector, Netanya offers excellent investment opportunities in both residential and vacation properties.

Where to find properties online:

• https://www.madlan.co.il/
• https://www.homeless.co.il/

Financing

Foreigners are able to obtain property loans in Israel, as the Israeli banking system permits non-residents to apply for mortgages. However, securing a loan as a foreign buyer may involve additional requirements, such as providing a valid residence permit, proof of stable income, and meeting specific criteria set by the lending institutions. These criteria often include a higher down payment compared to Israeli residents and potentially higher interest rates. It's advisable for foreign buyers to consult with local mortgage brokers or financial institutions to navigate the process and secure the best loan terms available.

Due Diligence and Sales Contract 

Although due diligence is not a legal requirement in Israel, it is strongly recommended, especially for foreign buyers. This process is essential for identifying potential issues or liabilities associated with the property, which could range from legal complications, such as ownership disputes or unclear title deeds, to financial concerns like unpaid taxes or liens. It also helps to uncover any physical problems, such as structural damage or zoning restrictions. By conducting thorough due diligence, buyers can make informed decisions and avoid unexpected complications after the purchase.

In Israel, the property sales contract is referred to as the "Heskem Menayot" (הסכם מניות). This document outlines the terms and conditions agreed upon between the buyer and seller, and once it is signed by both parties, it becomes legally binding. Foreign buyers should be mindful of specific considerations when purchasing property in Israel, such as potentially higher purchase taxes and compliance with regulations governing foreign investment.

The sales contract must include several mandatory clauses to ensure legal compliance. These typically involve the identification of both the buyer and seller, a comprehensive description of the property, the agreed-upon purchase price, payment terms, and the timeline for the transfer of ownership. Foreign buyers may also benefit from seeking legal counsel to fully understand these requirements and navigate the complexities of the Israeli real estate market.

Costs of buying property in Israel as a foreigner

Footnotes to Transaction Costs Table

The round trip transaction costs include all costs of buying and then re-selling a property - lawyers' fees, notaries' fees, registration fees, taxes, agents' fees, etc.

Transfer Tax

The buyer of real estate is typically required to pay an acquisition tax, with rates reaching up to 10% (the highest rate applies when the purchase price exceeds ILS20,183,565 (US$5,420,300).

Registration Fee
Registration fee is typically around 0.10% of the property value, plus 17% Value Added Tax (VAT). Registration fee include land registration extract, property records, and transaction tax clearance.

Legal Fee
Legal fee is generally around 0.50% to 1.00% the property value. The buyer and seller pay for their own legal fees.