Common Mistakes to Avoid When Buying Property in Israel
1. Skipping legal and technical due diligence
A frequent mistake is overlooking land titles, easements, building permits, or unauthorized extensions (closed balconies, basements). Your lawyer should verify the Tabu registry for clear ownership, legal status, and absent disputes. A structural engineer can assess technical conditions—violations can result in unexpected costs.
Older properties may need major updates—roof, plumbing, electrical, or safe rooms (mamad). A full inspection before purchase saves surprise bills.
2. Underestimating additional costs and taxes
Beyond purchase price, plan for:
– Mas Rechisha (purchase tax up to 10% for foreign buyers);
– Mas Shevach (capital gains tax on resale);
– Arnona (annual municipal tax);
– Notary, agency, legal, technical, insurance, upkeep.
These can add up to 15–20% of total cost and must be budgeted early.
3. Misaligning financing and failing to stress-test
Foreigners often can only finance 50% of purchase price, unlike many locals who obtain 70–80%. Opt for a fixed mortgage to avoid rate volatility.
Run 5–10 year financial projections, including worst-case scenarios for interest hikes or vacancies. Failing to keep a buffer can lead to serious financial trouble.
4. Lacking strategic clarity and local management
Define whether you're buying to live, rent short‑term or long‑term, or flip. Each goal requires tailored property type, location, and tax setup.
Misalignment leads to lower returns—e.g., investing in seasonal rentals in non-touristy areas or choosing an old building for high-end rentals.
5. Ignoring Israel's land ownership structure
About 93% of land is state-owned (managed by ILA); only 7% is private. Foreigners can buy private land outright or lease for 49–99 years on state land. This distinction affects resale, financing and tax implications.
Failing to recognize this may disrupt future resale or mortgage approval, and affect the usability of the property.
Conclusion
Buying property in Israel is accessible—even for non-residents—but demands meticulous planning. By addressing legal, financial, environmental, and land-tenure aspects from the start, and with the support of local experts (lawyers, surveyors, agents), you can avoid costly mistakes and secure a smooth transaction.