Israeli property law governs how land is owned, transferred, and managed, making it essential for foreign buyers to understand key regulations. Here are the critical considerations for international investors:

1. Public vs. Private Land

• 93% of Israel’s land is managed by the Israel Land Authority (ILA) and is leased through long-term agreements rather than sold outright.
• Private land is less common but allows for full freehold ownership, which may be more attractive to foreign buyers.

2. Leasehold vs. Freehold

• Foreign investors typically acquire leasehold rights from the ILA. These leases often extend for decades but include renewal obligations.
• Leasehold rights provide similar control to ownership but may require compliance with specific conditions or payments for lease renewal.

3. Registration with the Tabu

• All property transactions must be registered at the Land Registry (Tabu) to:
  • Secure legal rights to the property.
  • Prevent future ownership disputes.
• This step ensures the transaction is recognized and legally binding under Israeli property law.

4. Legal Representation

• Retaining a lawyer experienced in Israeli real estate law is crucial. They will:
  • Conduct due diligence to verify the seller’s ownership and any encumbrances.
  • Draft and review purchase agreements.
  • Navigate tax obligations, including purchase tax (Mas Rechisha) and capital gains tax (Mas Shevach).

5. Foreign Ownership Restrictions

• Foreign nationals can generally purchase urban property, but certain areas have restrictions, including:
  • agricultural land.
  • Properties in sensitive security zones.
• These restrictions vary and require legal verification before proceeding.

6. Taxes and Fees

• Transactions typically incur:
  • Purchase Tax (Mas Rechisha): A tiered tax based on the property value.
  • Capital Gains Tax (Mas Shevach): Applied to profit when selling the property.
  • Additional costs for lawyers, brokers, and registration fees.
• Proper financial planning with a real estate attorney or tax advisor helps mitigate unforeseen expenses.

Bottom Line

Foreign investors can successfully navigate Israel’s real estate market by understanding key legal principles. To ensure compliance and protect your investment:

• Work with experienced legal professionals.
• Perform thorough due diligence on the property.
• Plan for taxes and fees.
• Stay informed about regulatory changes that may affect your investment.

By taking these steps, you can secure a stable, legally sound property purchase in Israel.