Real estate in Israel has become for the last years one of the centers of attention for local and foreign investors. No surprise can be noted on this subject, due to the high returns made by investors, not only in central Israel, but also in the periphery. We can find properties today that are sold for the price of 7500$ to 8000$ per square meter. Not only on the rich north of Tel Aviv, but also on the traditional center of the city and in towns around Tel Aviv of high standards. The deteriorating exchange rate of the dollar against the N.I.S., and the law mortgage interest rates, can also add to this appealing situation for buyers.
The up-rising property market can gain the potential investor large profits, but also has a lot of risks to consider, mainly regarding non-professional investors, which can sometimes miss a great opportunity or fall into a real-estate trap and misfortune. Therefore, it is very important to make all necessary inquiries regarding the purchased property and to be assisted by an experienced legal practitioner while making the deal.
Some of the main points that one should notice very carefully in the course of a real estate deal is to find out about the legal ownership of the land and property and the position of the property regarding rights registration. Many of the traps and difficulties in property deal in Israel are to do with registration issues, also taking to account the fact that 93% of land in Israel is not private and owned by the state, so the relevant right are only of lease and there are two relevant sets of rights registration which are not always in sync between them. State land requires also additional payments and getting consent from the authorities regarding building rights, use of land and so on. Those come in addition to the licenses one must get from the municipal body regarding same issues.
Many more inquiries should be done. Because of the fact that the risk is a burden of the buyer, inspections of physical, plans and permissions, third parties rights and other encumbrances must be done. Also, tax issues may contain a risk due to mishandling of this important aspect of the deal. The tax while selling can reach up to 50% of all gains and there are also betterment taxes, purchase tax, sale tax and consent fees in the case of state land. That is to say that one should be advised carefully on this matter in order to avoid as much tax as he can.
To sum up, purchasing a property in Israel can be a smart investment with high returns even of 20%-30% per year. Although it seems more than attractive, the potential investor must be careful when planning his moves regarding the investment, especially when being a foreign investor with less understanding and information on the property local market.