If you’re thinking about selling your property in Israel you need to be aware of the process and the possible pitfalls.
There’s a lot to think about.
As soon as you have a potential buyer who is interested in purchasing your property, (or in many cases, even before that stage), you should consult with a real estate lawyer to ensure that the contract is in your best interests.
To start with, you will need to take into account everything from capital gains tax to payment schedules, any fees to the Israel Land Authority, possible illegal building issues, property, tax, betterment tax and capital gains tax.
Capital gains tax is one of the possible pitfalls you need to watch out for. If you are selling residential property such as a house or apartment, your lawyer will help you determine if you need to pay any capital gains tax and how much that tax will be.
Foreign residents are not eligible for exemptions (even if they have Israeli citizenship), although they may be entitled to a discount under certain circumstances. For sellers with more than one apartment, significant tax planning is necessary to maximize any discounts.
If you are selling the apartment at a profit, there are some associated expenses which may be applied to help lower the tax due. Remember to save receipts from all transactions and renovations.
Capital gains tax can be complicated to figure out, and your real estate lawyer will work with you to minimize the tax due in your particular situation.
A betterment tax applies when there is a change in the zoning laws for a certain neighborhood, giving the owners of the local apartments extra building rights. Betterment tax is usually paid by the seller so before selling it is wise to find out if the tax applies.
If there is a mortgage on your property, you may decide to transfer it, pay it off completely or freeze it. Your real estate attorney will help you weigh up your options.
When finalizing the sales contract your lawyer will ensure that the payment schedule fits in with your requirements. The usual payment schedules here do not reflect those in most countries abroad and are open to negotiation.
Being well informed in advance of all the issues with the deal can make selling your property in Israel a less stressful experience.
