When purchasing a new apartment under construction, there are additional expenses, beyond the purchase price:
- Legal fees – Legal fees of the purchasers lawyer – This can be from 1% – 2% of the price of the apartment, plus V.A.T (Value Added Tax – this is 15.5% of the fee inquestion). Lawyers usually charge 1% plus V.A.T., but if they provide additional services, then they usually charge more than this. The legal fees of the company are paid by the purchaser. This can be between 1%-2% of the price plus V.A.T. However, very often the price quoted already includes the company’s legal fees.
- Real Estate Agents Fees – These fees are usually paid by the construction company, however if you hired an agent to show you around various projects, the agent will charge you a fee for this.
- Purchase tax – This is calculated on a sliding scale based on the price of the apartment. This scale is updated every 3 months. Olim are granted a partial exemption from purchase tax. Please click here for the latest purchase tax scales.
- Money Conversion Costs – Although prices are usually quoted in U.S.dollars, the payments are made in Shekels. This means that if you are using dollars to pay for your apartment, this money must be converted to Shekels. The banks in Israel charge commissions for receiving foreign currency into an account and for converting the money to Shekels. In addition, they buy your dollars at a lower rate of exchange than the representative rate of exchange.
The representative rate of exchange is the rate of exchange that is published every day (except Saturday and Sunday) by the Bank of Israel. The payments of the price are paid in Shekels according to the representative rate of exchange and not the rate at which the bank buys your dollars. You therefore need to send extra money to cover this difference and to cover the bank commissions for converting the money. You should ask your attorney to negotiate better commissions for you with the bank.
- Mortgage costs – The mortgage bank charges a fee for opening up a file. This fee can be negotiated with the bank manager. In addition, there are the following fees:
- Assessor – Usually the bank does not require an assessor for mortgages for apartments under construction, but occasionally they do. This will cost about $600.
- Notarial fees – The banks require a notarized power of attorney. This can cost between 158 and 220 NIS.
- Registration of pledge – a pledge must be registered in the banks favor and this costs 155 NIS.
- Deposit for gas – You have to pay the gas company for a new hookup to the gas line. This can cost between 1500 to 2000 NIS.
- Should you wish to have the apartment checked out by an engineer before taking possession, the usual fee is $500 plus V.A.T for a written report and $250 plus V.A.T. for a verbal report.
- Should you wish to upgrade or make changes to the basic apartment offered by the construction company, the company will charge you an additional fee for this. You are recommended to consult with an interior designer about these changes.