Fees & Expenses
When selling a property in Israel it is important to understand that, unlike in some other countries, in Israel the closing price of the property is 100% paid to the seller. The seller has to pay fees to service providers for selling the property. Some of the fees are a direct correlation to the closing price where others are fixed and depend on the service provider.
Tax, Agent & Lawyer Fees
Agent Fees are 2% of sale price + VAT; the fee goes directly to your agent representing you in the process. The other agent representing the buyer is paid separately by the buyer.
Lawyer Fees depend on your choice of attorney. The fee can be anything between 0.5%-2% of sale price + VAT. The price depends on the size of the firm and the type and duration of the deal – construction, second hand, land, future rights. It is highly suggested to ask your real estate agent to recommend the correct lawyer for your deal.
Capital Gains Tax – After selling a property in Israel, the owner (unless exempt) must pay capital gains tax, 25% of the increase in the value of the apartment. That increase is calculated by deducting the purchase price and deductible property expenses (such as agent fee, lawyer fee, taxes, renovation, construction, etc.) from the sale price of the property. Israeli citizens are eligible for capital gains tax exemption if they own only one property and owned that property for at least eighteen months.
Betterment Tax - is a tax paid to the local municipality for additional building rights approved for your apartment. The additional rights will be added due to a change in the zoning which would apply for a large area, not just a specific building. Betterment tax will be in the value of 50% of the additional land value added to your apartment. As a rule of thumb, the value of an apartment per square meter is divided into three: land, construction, and profit. The 50% tax is on the value of the land. Betterment tax will be paid in one of two occasions, either when the owner sells the apartment, or if the owner issues a building permit to build according to the additional rights.
Because the taxes are individually calculated on a case by case basis, be sure to discuss these taxes with your lawyer to fully understand the exact costs.
Contractor – It is sometimes recommended to hire a contractor to make small cosmetic renovations to the apartment such as painting, fixing lighting, and covering holes and damage to walls and flooring. These cosmetic renovations can cost between 3K to 15K NIS, and can make a huge difference to the aesthetics of your home.
Staging – Although it is not custom for apartments in Israel to be staged, its is well known that a furnished apartment can help a buyer better envision what their new home will look like. Depending on the size of the apartment and the quality of the furniture, staging will cost anywhere between 50K and 300K NIS.
Appraiser Fee – Not always necessary when you work with a professional real estate agent, but if you do need one, it should cost between 6K to 12K NIS.
Currency Transfer Fee – If you are in need of a money transfer, make sure you negotiate your currency rate with the banks, and shop around. It is possible to save a significant amount of money by making the right currency transfer choice.
Make sure to consult with your real estate agent before committing to any of the expenses listed above.
The content of this page should not be construed as consultation and/or a professional opinion. Please consult a real estate broker for further consultation.