In order to buy property in Israel, a buyer (resident or non-resident) must obtain a land registration extract from the Land Registration Office in the first place in order to ascertain the ownership of the property. The buyer must also check for the building rights of the property from Municipal records.
Once the ownership and settling of the legal encumbrances have been established, the contracting parties are then allowed to execute a sale agreement.
A sale agreement is a written contract which must contain all the important details such as the names of the contracting parties, description of the property, agreed price of the property as well as the nature of the transaction. All these details are very important to form an agreement and if these details are not contained fully, the agreement gets omitted. However, the signature of the contracting parties is not a requirement for rendering the validity of an agreement.
The sale agreement must be reported to the tax authorities for the payment of all kinds of related taxes. Once all the taxes are paid and the tax clearance is received, the transaction must be registered at the Regional Land Registry Office.
The deposits are not considered to be customary in Israel. However, a security deposit is very important and it is to be paid during the time of signing the contract. The initial payments in terms of security deposits are as low as 20 percent and could be as high as 50 percent respectively.
In Israel, it is very important for the buyer to pay for the property over a stipulated time period. For all sorts of protection of the buyer, a cautionary notice must be filed at the Land Registry Office in order to ward off the seller from reselling the property. Once the property is paid in full, the change in the title deed could be executed.
- The purchase tax is charged at the rate of 5 percent of the total property value.
- The registration fee is charged at the rate of 0.20 percent of the total property value along with a VAT of 18 percent.
- The legal fee is charged at the rate of 1-2 percent of the total property value.
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