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104 The US-Israel Legal Review 2019
ISRAEL: REAL ESTATE
the city. In Israel, the primary criteria determining
city tax rate include: use (residential, commercial,
office, industry, etc.), floor area, financial condition
of the resident, and location of the property (luxury
neighborhood, developed commercial area, lower
socioeconomic neighborhood, etc.).
In some cases, the seller will also be required
to pay improvement levy (
heitel hashbakha
) in
connection with the property. In Israel, this is a
mandatory payment that landowners or long-term
lessees are required to pay by the Local Planning
& Building Council that approved a plan that
increases the value of the property (e.g., by allowing
construction of another floor). The levy is due and
payable by the seller upon the sale transaction, even
though the seller has not yet lawfully exercised such
new rights under the plan. By law, the duty to pay
improvement levy is upon the owner or long-term
lessee. Therefore, although the sale agreement can
stipulate that it would be paid by the buyer, this
would only be binding as between the buyer and the
seller, but not against the Local Council.
PHYSICAL CONDITION OF THE PROPERTY
The general rule in real estate transactions in
Israel is that the property is sold “as is”. The seller
is not liable for the condition of the property, unless
he knew about a defect that could not have been
discovered by reasonable inquiry, or if he concealed
this defect from the buyer. Therefore, in order
not to have unpleasant post-purchase surprises,
buyers are advised to conduct an inspection of the
physical condition of the property before signing
the purchase agreement, preferably through
appropriate professionals, such as experienced civil
engineers.
This is of particular importance with respect to
material defects that cannot be seen by the naked
eye, such as hidden water damage or leaks, piping
problems, etc. Following the findings, the parties can
agree to reduce the price, or, the sellers may warrant
that they will repair some of the defects, prior to
delivery of possession.
Rarely will sellers agree to reduce the price for
defects arising from reasonable wear and tear.
IMPORTANT POINTS FOR FOREIGN
PURCHASERS OF REAL ESTATE IN ISRAEL
Purchase of State-Owned Land
By law, rights in real estate owned by the State of
Israel may not be transferred to foreigners, except
subject to authorization by the Chairperson of the
Israel Lands Council or the Director of the Israel
Lands Authority.
A “foreigner”, as defined by law, is any person
who is (i) not a citizen or resident of Israel, (ii) not
entitled to immigrate to Israel pursuant to the Law
of Return, or (iii) a corporate entity controlled by
a person who is not an Israeli citizen or resident or
who is not entitled to immigrate to Israel pursuant
to the Law of Return.
By law, authorization to hold rights in real estate
will be granted to foreigners subject to the following
criteria: public interest and safety, affinity of the
foreigner to Israel, including his personal specifics,
period of residence in Israel and family relation
to any non-foreigner; the purpose for which the
foreigner intends theproperty; the scope of property
purchased by or transferred to such foreigner
prior to the application; attributes of the property,
including size, location and authorized use.
Note that these restrictions do not apply to
inheritance by individuals.
Purchase and Betterment Tax Breaks for
Foreign Residents Who Can Prove That The
Transacted Apartment Is Their Only One
A foreign resident that is purchasing a residential
apartment in Israel and can prove to the Israeli
Tax Authorities that he does not own any other
apartment in his country of residence, shall be
Under Israeli law, authorization to
hold rights in real property will
be granted to foreigners subject
to a number of criteria.