Luxury properties in Israel
Luxury properties in Israel are very different from the ordinary or average real estate market in the country. As in any significant purchase in life, it is also necessary to study the field of luxury properties. Buying luxury properties in Israel, like buying any property in Israel, entails a wide variety of issues that must be taken into consideration prior to purchase, and despite the common belief, there is a large variety of luxury properties and luxury apartments in the Israeli market. Therefore, when deciding to buy a luxury property in Israel or anywhere in the world, it is best to come prepared and in this way reduce the amounts of information that clever sales agents unload on their potential clients. In addition, when you are target-oriented, it is easier to find a preferable property and to avoid unnecessary additional expenses, since, in the course of purchasing luxury property, it is easy to find yourself burdened with heavy and significant expenses.
There are several key points that should be taken into consideration when buying luxury properties in Israel:
Buying a luxury property is an expensive matter. Taxation on luxury properties in Israel is one of the highest in the world, amounting to 7% to 8% of the property’s value. Unlike other countries in the world, such as Spain for example, where luxury properties are taxed regressively (a fixed, invariable tax rate), Israel taxes luxury properties by percentage. Israeli taxation creates a reality where although there is a relatively large supply of luxury properties, their prices are high. Despite the high level of taxation, the field of luxury properties is a field with a lot of grey areas, and therefore hiring a professional lawyer who is familiar with the field of luxury properties in Israel can significantly decrease the buying cost as well as potential problems which could arise later.
Location and type.
The property’s location is highly critical to the utility derived from it. Not all luxury properties everywhere yield identical utility. At present in Israel, there is widespread construction in many regions in Israel, and therefore, many areas are expected to develop property values in them to increase in value. Therefore, it is sometimes profitable to move away from those locations where luxury properties are common (such as Caesarea, for example), and to specifically choose places where luxury properties are a developing, rather than a developed, field. The property’s value will climb more steeply when it is located in less known areas, in comparison with property bought in the more common areas.
Luxury properties also come in all different styles – from huge mansions to luxury apartments in prestigious buildings on the beach. It is recommended to check what type is more efficient for the purpose for which the property is bought.
The first necessary step before inquiring about a luxury property is to define a purpose and direct the property search so that it realizes the predefined purpose. Luxury property can serve as a property for investment which should yield economic returns in the future, a residence, or even a vacation house for different seasons.
The importance of thorough knowledge of Israeli law in luxury real estate transactions.
After concluding the negotiations between the seller and the buyer on the price, the first hurdle is behind you, but still, you must consider a few matters, and professional legal advice is crucial at this stage – the stage of drafting the contract. This is where the lawyer’s familiarity with Israeli law is tested, to prevent unpleasant surprises whether on issues of building deviations, ownership, debtors if any, what is to remain in the property following the sale, timetables, registration in the land registry, and more. In luxury transactions, the price is sometimes determined by the USD exchange rate, which is another matter which should be settled before signing the contract.
Purchasing a luxury property can be a transaction that will yield many economic returns in the future and improve the buyer’s economic position. On the other hand, if the purchase is not conducted in a smart and calculated manner, it is easy to be drawn into incurring huge financial expenses, including monthly and not only unique expenses. Hiring an attorney specializing in luxury properties and skilled in Israeli law can significantly reduce these many expenses as well as work hours, and decrease risks substantially.
Eli Shimony – Israeli law firm represents clients on all legal matters in Israel. For any questions please contact us and we will be happy to assist.
By email: [email protected], By phone: +972-52-2769773, +972-3-5507155.
The above is only general information and does not replace legal advice which is usually necessary before taking legal proceedings.