January 11, 2012
Mazal Tov! After intense research, sleepless nights and constant headaches and worries, you have finally found your dream home. You already had it checked out by an engineer and found its structure stable. There are still additional expenses that should be taken into account, apart from finalizing the price:
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Purchase Tax - for a first home / apartment the tax rate varies between 0% and 5%, depending on the purchase price. If this is your second property then the tax rate starts at 5% and can go up to a 7% tax rate.
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Real Estate commission – whatever has been arranged with the realtor, usually 2% of the purchase price + VAT.
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Taking a mortgage - there are bank charges and fees for mortgages which typically run about 0.25% of the amount of the mortgage being taken, if required.
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Mortgage Broker - if you have one then whatever has been arranged with him. Usually 1% of the total mortgage sum + VAT.
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Legal fees – usually 1% of the purchase price+ VAT.
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Registration fees – besides for transferring title in your name there are other registration actions that need to take place, such as registering a note of caution or a pledge (הערת אזהרה ו/או משכון) in your favor after signing a contract and registering a mortgage.
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Consent or capitalization fees - If the property is registered in the Minhal, you might need to pay a fee for their consent to register the property under the purchasers name or a fee to renew the lease of the property with the Minhal. In order To transfer title- you will need to pay Arnona (Municipal rates) in advance from the date of possession until the end of year.
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Miscellaneous - renting a moving company to move your furniture and boxes from current location to your new home. Additional furniture needed for your new home. Any upgrades or changes you would like to do to the new home.
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Bank commissions and exchange rate differentials of approximately 0.75% if your money is held in foreign currency, for the conversion to Shekels.
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Consumer Price Index- the payments are influenced by the index when purchasing from a contractor.
Sellers should take into account the following expenses:
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Capital Gains tax (מס שבח) - CG tax will apply whenever there is a value difference between the original purchase price and the current sale price. CG tax is imposed on a seller of a property on the amount of the appreciation. However, there are very generous tax exemptions for sale of residential homes as described below.
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Enhancement Tax היטל השבחה)) - the Municipality may impose this tax which relates to any enhancements they had issued on the property, for instance, additional building rights. Before selling it is advised to seek this information from the Municipality.
Benzi Jablinowitz, Adv. & Mirit Reif, Adv.
Benzi Jablinowitz is an attorney in the real estate department at Hacohen Wolf Law Offices in Jerusalem and can be reached at 02-6222335. Mirit Reif is an attorney in the Bet Shemesh branch of Hacohen Wolf Law Offices. She can be reached at 02-9999235. Hacohen Wolf is a law firm specializing in Real Estate, Taxation and Commercial Law with offices in Jerusalem, Beit Shemesh, Tel-Aviv and New York.