Foreign Residents and Israeli Property
Buying, holding and selling Israeli real estate from outside Israel
David Melnik, Advocate & Notary | Tel Aviv
Two things separate a foreign resident's property transaction in Israel from a local one, and neither of them is about the property. The first is distance. Signatures, identity verification, inspections and money transfers all have to work across borders, and each of those steps has a specific legal form in Israel. The second is status. Israeli law treats a foreign resident differently at purchase, during ownership and on sale, and the differences are not marginal.
Everything below follows from those two facts. The sections cover the stages in order, and each one links to a fuller treatment.
The three stages
Buying
How title is held and registered in Israel, the difference between freehold and Israel Land Authority leasehold, what due diligence actually covers, and the anti money laundering requirements that apply to funds arriving from abroad.
Tax
Purchase tax at 8% from the first shekel, land appreciation tax on sale and where the linear calculation helps, the two routes for taxing rental income, and what a tax treaty does and does not do.
Holding and letting
Running a property from abroad: finding and vetting tenants, the lease and the securities behind it, collection, breach and eviction, municipal tax and the building committee, and the annual return.
Where the difficulties concentrate
A foreign resident pays purchase tax at additional apartment rates, 8% from the first shekel, even where the property is their only home anywhere in the world. There is no 0% bracket. Buyers who budget from the Israeli resident table are consistently short, and the gap is usually six figures.
Not every Israeli property sits in the Land Registry. Rights may be held at the Israel Land Authority, through a housing company, or in a condominium that was never formally registered. Which of these applies changes what can be verified before signing, how long transfer takes, and what security a buyer can realistically obtain in the meantime.
Signing from abroad generally requires a notarial power of attorney, and where it is executed outside Israel, an apostille. The instrument has to be drafted for the specific transaction. A general power of attorney prepared in advance is often refused at the moment it is needed most.
Further reading
Israeli property transactions for clients abroad
The firm acts for foreign residents on Israeli real estate matters, from due diligence and transaction structure through to reporting and eventual sale. Most of the work is done without the client needing to be in the country.