Second-Hand Apartment Expenses Checklist
When purchasing a second hand apartment in Israel there are additional expenses beyond the purchase price:
☑ Legal fees. These may be anywhere between 0.5% – 2% of the price of the apartment, plus VAT (Value Added Tax – this is 17% of the fee). Lawyers usually charge 0.5% – 1% plus VAT, but fees may be higher if additional services are offered.
☑ 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.
☑ Purchase tax. This is calculated on a sliding scale based on the price of the apartment. This scale is updated every year. New immigrants are granted a partial exemption from purchase tax. Find out more about the purchase tax levels.
☑ 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.
☑ Mortgage costsThe 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:
- Apraiser 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.
- Notarial fees The banks require a notarized power of attorney. This can cost between 196 NIS and 274 NIS.
- Registration of pledge A pledge must be registered in the bank’s favor and this costs 192 NIS.
- Mortgage Broker – To help you obtain a mortgage at good conditions it is advisable to hire a mortgage consultant. They usually charge about 1.5% of the amount of the mortgage plus VAT. Some charge a flat fee.
☑ 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 350 NIS.
☑ Engineer’s Report. If you wish to have the apartment checked out by an engineer before taking possession, the usual fee is about 4000 NIS plus VAT for a written report and about 1500 NIS plus VAT for a verbal report.
☑ Deposit for gas. The purchaser reimburses the seller for the gas deposit. This is usually about 300-400 NIS.