Purchasing Property in Israel by a Foreign Resident
Purchasing Property in Israel by a Foreign Resident
Israeli real estate and purchasing property in Israel provides a good opportunity for foreign buyers to make profitable investments. Israel`s economic situation is relatively stable, providing an excellent opportunity to enjoy profits of the investment.
Foreigners can purchase property in Israel without considerable restrictions.
However, carrying out this kind of transaction requires qualified legal assistance. Buying a new apartment from the developer or from a private owner (a second hand apartment) requires a different set of documents for registering the transaction at the Land Authorities.
There are also some differences in drafting the transaction’s documents for foreign buyers. In general, appropriate legal assistance of the purchase or sale of real estate will include:
1) Identification of the seller/developer and the examination of the seller’s/developer’s rights to the property sold: mortgage, lien, seizure, third party rights, etc.
2) Existence of the building permit and avoiding construction deviation.
3) Drafting/examination of the purchase/sale agreement.
4) Land tax planning.
5) Registration of ownership in the buyer’s name.
Transferring Money to Israel from Abroad
Certainly, one of the major concerns for a non-resident purchasing property in Israel is the issue of transferring money to Israel from abroad. Below are a few starting points for non-residents who have offshore accounts and want to buy property in Israel.
It should be noted that a foreign citizen has the right to open an account in any Israeli bank, and subject to the specific procedure, there are no substantial restrictions on opening such accounts at the moment. Problems may arise in the next stage, transferring funds to the local Israeli account from abroad. The account holder will have to explain their relation to the account abroad from which the transfer is made.
Often, the owner of the account (from which the transfer is made) is a company whereas the account holder in Israel is a physical person. There are a number of possible explanations for the money transfer from a company account to an individual’s personal bank account in Israel:
1) If the physical person in Israel is one of the founders of the company abroad, then the person will need to provide the bank the certified constituent documents of the company.
2) In the case the physical person in Israel is an employee or adviser of the foreign company and the amounts that are transferred are their salary or consultation fees, the bank may require a contract or other appropriate documents proving the authenticity of this relationship.
3) If the physical person has received credit from the foreign company, the bank will require a loan agreement.
Opening a Trust Account
Another option for a foreign resident who wishes to transfer funds from abroad to an Israeli bank account to purchase property in Israel is to open a trust account in Israel. This is relatively similar to opening a personal bank account (described above) with the distinction that the trustee will manage the account on behalf of the beneficiary, and the trustee will have to explain to the Israeli bank the nature of the relationship with the source of transferred funds.
An even more convenient way to transfer the funds for the purchase of real estate in Israel is to arrange that the money from abroad is transferred directly to the seller`s Israeli account. Such a bank transfer is useful in order to avoid the need for a declaration and explanation of the relationship between the source of the funds and the purchaser’s Israeli account (in the case of opening a bank account in Israel as described above). In such a case, the seller’s bank will usually be satisfied by the very existence of a contract of purchase/sale of real estate and won’t require any additional explanations concerning the nature of the relationship between the purchaser and the person that is transferring the money.
It is worth mentioning that alongside the existence of formal rules, there are a lot of unwritten ones. Therefore it is highly recommended to consult a real estate lawyer in Israel before engaging in such a transaction.
Please contact us if you are interested in purchasing property in Israel.
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:מאמרים מומלצים