Buying a home in Israel is a dream for many, but the property’s final price is just the beginning. Beyond the headline figure, a range of additional costs must be factored in to avoid unpleasant surprises. These costs can add up to 10–15% of the property’s value, covering everything from taxes and legal fees to inspections and moving expenses. Understanding these closing costs and expenses in advance can help you plan effectively and make the home-buying process smoother.
To help you navigate the financial side of buying a home in Israel, we’ve compiled a comprehensive guide to all the closing costs you should prepare for. Knowing these in advance will save you from unexpected surprises and empower you to plan your finances wisely.
1. Purchase Tax (Mas Rechisha)
Purchase Tax (Mas Rechisha) is one of the most significant costs of buying a property in Israel. The rate depends on the property’s price, the buyer’s residency status, and whether the property is your first home or an additional one. Payment is due within 60 days of signing the agreement, and higher rates apply to more expensive properties or foreign buyers.
When purchasing new construction, Mas Rechisha is calculated on the total value of the transaction, including VAT. While the tax must be generally paid within 60 days, payment can be deferred until 50% of the purchase price is paid, though interest and inflation will apply.
The Mas Rechisha Calculator can provide precise figures depending on your situation.
2. Legal Fees
Hiring a real estate attorney is essential for navigating Israel’s complex property laws and ensuring your transaction is legally sound. Legal fees typically range between 0.5% and 1.5% of the purchase price, plus VAT. When buying from a developer, you may also be required to cover the developer’s legal fees. These fees are capped at 0.5% of the purchase price plus VAT, or 5,770.77 NIS plus VAT, whichever is lower. However, for luxury apartments priced above 4,642,750 NIS, the developer’s lawyer may charge additional fees, increasing the total cost.
3. Real Estate Agent’s Commission
If you use a real estate agent to find your home, their commission is generally 2% of the purchase price, plus VAT. While this is standard across the industry, some agents may be willing to negotiate lower fees for higher-value transactions.
4. Currency Conversion and Transfer Fees
For international buyers, currency conversion and transfer fees can be substantial. Payments must be made in Israeli shekels, and converting foreign currency can incur fees of up to 0.5%. Additionally, exchange rate fluctuations between the time of purchase and payment can increase the total amount paid.
5. Mortgage Costs
If you’re taking out a mortgage, there are several expenses to remember. Banks charge a file opening flat fee of 360 NIS. Resale properties often require an independent appraisal by a licensed professional, ranging from 1,000 to 6,000 NIS plus VAT. If you work with a mortgage broker, their fees usually amount to 1% to 1.25% of the loan value, plus VAT. Additional minor costs may include notary services and fees for registering the mortgage, which can add a few hundred shekels to the total.
6. Inflation Linkage Costs
For new construction buyers, payments are often tied to inflation indices such as the Consumer Price Index (CPI) or Construction Cost Index. If inflation rises during the payment period, the cost of your property will increase accordingly, potentially adding thousands of shekels to the final price.
7. Builder’s Fees
When buying from a developer, additional fees may apply for measurements, planning, and administrative tasks. These builder’s fees can add several thousand shekels and should be factored into your budget.
8. Property Inspection Fees
A property inspection is strongly recommended, especially for pre-owned homes. Hiring an engineer to assess the property for structural issues or hidden defects can save you from costly surprises later. Inspection fees generally range from 3,000 to 6,000 NIS plus VAT.
9. Utility Connection and Transfer Fees
Connecting water, electricity, and gas for new properties can cost up to 10,000 NIS. Transferring utility accounts into your name for pre-owned properties incurs smaller fees but still requires attention to detail.
10. Interim Housing Costs
If there’s a gap between selling your current home and moving into the new one, you may need to pay for temporary housing or carry dual mortgages. These overlap costs can add up, especially if construction delays occur with new properties.
11. Renovation, Upgrades, and Furnishings
Whether you’re customizing a new home or updating an older one, renovation and furnishing costs can be significant. From kitchen appliances to wardrobes, air conditioning, and furniture, these costs vary widely based on your preferences and needs. Planning ensures you can manage these expenses.
12. Moving Costs
Finally, don’t forget moving expenses. Hiring a moving company typically costs between 4,000 and 15,000 NIS, depending on the distance and the volume of belongings. Additional expenses like packing materials or storage may also apply.
Buying a home in Israel is more than a transaction—it’s an investment in your future. Understanding and preparing for these additional costs allows you to budget effectively and avoid surprises when buying a home in Israel. Consulting with experienced professionals ensures you’re fully informed and ready to navigate the complexities of the Israeli property market. With the right preparation, you’ll be well on your way to owning the home of your dreams.
Whether you’re purchasing a new home or a secondhand property, the Buyitinisrael team is here to guide you every step of the way.
