List of Expenses When Purchasing a Second Hand Apartment in Israel


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By
Nicole Levin

 

When purchasing a second hand apartment in Israel there are additional expenses beyond the purchase price:
  1. Legal fees. These may be anywhere between 0.5% – 2% of the price of the apartment, plus VAT (Value Added Tax – this is 16.5% of the fee). Lawyers usually charge 0.5% – 1% plus VAT, but fees may be higher if additional services are offered.
  2. Real Estate Agents Fees. It is customary for agents to charge 2% of the price plus VAT from each side. Before signing with an agent it is important to ascertain the fees and in which instances they are to be paid.
  3. Purchase tax. This is calculated on a sliding scale based on the price of the apartment. This scale is updated every 3 months. Find out more about the purchase tax levels.
  4. Money Conversion Costs. Although prices are usually quoted in US dollars, payments are made in shekels. The banks in Israel charge commissions both for receiving foreign currency into an account and for converting the money to shekels. In addition, they buy dollars at a lower rate of exchange than the representative rate of exchange. The representative rate of exchange is the rate of exchange that is published every day (except Saturday and Sunday) by the Bank of Israel. Payments are paid in shekels according to the representative rate of exchange and not the rate at which the bank buys dollars. Overseas buyers must include this difference in their purchasing budget.
  5. Mortgage costs The mortgage bank charges a fee for opening up a file. This fee can be negotiated with the bank manager. In addition, there are the following fees:
    1. Assessor In the case of a second hand apartment, the banks require that an assessor look at the apartment to assess its value. This costs about $600 plus VAT.
    2. Notarial fees The banks require a notarized power of attorney. This can cost between 158 NIS and 220 NIS.
    3. Registration of pledge A pledge must be registered in the bank’s favor and this costs 155 NIS.
    4. Registration of a Protective Covenant. If the apartment is registered in the land registry, then there are fees for the registration of a protective covenant in the name of the purchaser and the mortgage bank. These fees come to about 325 NIS.
  6. Engineer’s Report. If you wish to have the apartment checked out by an engineer before taking possession, the usual fee is $500 plus VAT for a written report and $250 plus VAT for a verbal report.
  7. Deposit for gas. The purchaser reimburses the seller for the gas deposit. This is usually about 300-400 NIS.

Fee for Transfer of Rights. Should you wish to upgrade or make changes to the basic apartment offered by the construction company, the company will charge you an additional fee for this. You are recommended to consult with an interior designer about these changes.

 



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