The Real Estate Process From Abroad

Navigating the Jerusalem Real-Estate Market From The United States: What To Expect As A Non-Resident

Jerusalem, A Top Choice for Foreign Investors

Jerusalem has proven to be a desirable location for foreign investors. Recently, there’s been an unprecedented amount of interest in the city’s real estate.

Non-Israelis (especially North American residents) have flocked to Jerusalem’s real estate market. And in recent years, the pandemic drove even more interest in the city.

Due to the nature of Jerusalem’s real estate scene, now is the perfect time to buy an apartment. You may be wondering where to begin. With proper guidance, you can buy a property in Jerusalem as a U.S. citizen from Israel or abroad.

[ Download FREE PDF Checklist to Help You Through the Process ] 

These are the 9 steps you need to take when buying Jerusalem real estate:

  1. Know what to expect 
  2. Find the best realtor to help you find your Jerusalem property
  3. Sign on a power of attorney document
  4. Open up a bank account in Israel 
  5. Prepare Your Finances
  6. Obtain a mortgage
  7. Sign the closing agreement and receive the keys to your apartment
  8. Make the real estate tax payment
  9. Pay additional apartment-related expenses



1. What To Expect As A Non-Resident Buying Jerusalem Real Estate

As a foreign resident, you’ll need some guidance throughout the buying process. Logistical, legal, and bureaucratic difficulties may arise during the real estate process. Additionally, you may find it challenging if you don’t speak Hebrew.

Learning how to navigate the system and employing the right team will set you up for success in your real estate journey.

Real estate agencies, mortgage brokers, and attorneys can ensure that the real estate process goes smoothly.

They can provide valuable advice and help you navigate the real estate, law, and or bureaucracy logistics that come up when buying in Israel.

2.  Finding The Best Realtor To Help You Find Your Dream Property In Jerusalem

Finding a property in the bustling metropolis can be daunting, and you’ll want to know that you’re in good hands. Working with a professional real estate agency can make the process much more efficient.

Before speaking with real estate specialists, it’s essential to confirm two things. That they have a valid real estate brokerage license and can speak with you in English. This will ensure a smooth and successful relationship and transaction.

As a foreign buyer, you should find out if the potential realtor offers virtual services. Some realtors offer overseas consultations. The realtors can answer your questions or include you in showings via video. Thy can also communicate with the seller for you, and review closing agreements. This can save you valuable time since you won’t have to come to Israel to search for a Jerusalem property.

3. Signing on a Power Of Attorney Document

Here are the steps you’ll need to take when purchasing a Jerusalem property from abroad.

First, you’ll need to grant a power of attorney to an Israeli attorney or someone else. (This person will handle all aspects of the purchase on your behalf. )

After you sign a power of attorney, you need to get it notarized at an Israeli Embassy or The Israeli Consulate and send it to Israel.

Upon completing those steps, the attorney (or another person you’ve chosen) will manage everything.

They’ll be able to represent you and sign on documents on your behalf. They can take care of tax authority documents, mortgage documents (if the buyer is taking out a mortgage to finance the asset purchase), the Tabu (the land registration extract) documents, and more.

(It’s important to note that specific documents may need to be signed by you, the buyer, in person. In that case, you can sign them at the Israeli Consulate.)

4. Opening Up A Bank Account In Israel as a Foreigner

You’ll need to open an Israeli bank account to take out a mortgage. It’s important to note that you’ll need to be present in Israel to open a bank account.

(Another solution is to have your lawyer open an escrow account for transferring funds to Israel. Those funds can cover all necessary payments, including taxes and fees.)

Additionally, you may choose a bank with English-speaking staff or ask an Israeli you know for help with translation.

To open the account, you’ll need the following documents: your passport, another form of I.D., immigration documents, your social security number (for U.S. ex-pats), cash or check to open the account, and your Note of Future Bank account (you will get this at the airport upon arrival in Israel). As a U.S. citizen, you’ll also have to fill out several forms, including a W-9.

5. Prepare Your Finances For Your Real Estate Purchase 

It’s a good idea to prepare your funds to ensure that the closing process is a smooth one.

The payments dates will be stated on the contract.  The first payment for your property in Israel is usually between 10%-20% of the property’s price, the second payment usually adds up to 50% of the property’s price, and the last payment is either a mortgage or a payment by the buyer. After making these payments you’ll receive the key to your apartment.

6. Obtaining a Mortgage As A Non-Citizen

After you’ve set up a bank account, you may want to obtain a mortgage.

Getting a mortgage as a non-Israeli can be a bit more complex than a resident, although the approval process is still similar.

The main difference is that it may take longer for the bank to assess your financial stability since your income and assets are overseas. During this stage, the bank will request documentation of the borrower’s assets, income, and expenses.

Mortgages for non-citizens can cover up to 50% of the property value and, in some cases, a higher percentage.

By staying patient and preparing in advance, you can navigate this process and secure a mortgage in Israel.

7. Signing  The Closing Agreement 

You should do a few things before signing your closing agreement. You can refer to our helpful guide to learn more about what to do before buying your Jerusalem property.

One main task you should ensure that you and the seller agree on the terms of the sale before signing the document.

After signing the agreement, the buyer will give the seller a part of the payment. Then you’ll need to register the cautionary note with the Land Registration Office.

Finally, you and the seller must file the necessary taxation documents with the Land Tax Authorities. The documents must be filed within 40 days of signing the agreement.

8. Making The Real Estate Tax Payment As a Non-Israeli

It’s essential to file the real estate documents with the Israel Tax Authority after signing the closing agreement. As a non-Israeli, there are a few differences you should be aware of.

Firstly, there are two kinds of tax: the betterment tax (capital gains tax) and the purchase tax. In most cases, the apartment buyer handles the purchase tax payment while the seller is in charge of paying the betterment tax.

The purchase tax rate on real estate depends on how many apartments you own at the time of the transaction. If you’re a first-time buyer, you’ll be able to take advantage of an exemption from purchase tax. The exemption is up to the price bracket specified in the Real Estate Taxation Regulations.

If you already own one or more apartments at the time of your real estate purchase, you won’t be eligible for the first-time buyer exemption. You will be required to pay a higher property tax rate.

If the property’s price exceeds the limit specified in the Real Estate Taxation Regulations, you must pay a graduate tax on the excess amount. The regulations state the graduated tax amount.

The purchase tax is based on the property’s total purchase price. (You can find out what the purchase tax threshold and rate is for you via the Israel Tax Authority.)

9. Paying For Additional Apartment Related Expenses

There may be more costs associated with buying an apartment in Jerusalem. For example, if you hire an engineer to inspect your property or to renovate your apartment after buying it. In these cases, keep these expenses in mind before your real estate budget. You’ll make these payments during your real estate journey or afterwards.

We’ve completed reviewing the main steps you’ll need to take as a non-citizen purchasing a Jerusalem property.  We wish you the best of luck on your real estate journey. Feel free to reach out Gov Ari Real Estate Agency Jerusalem; we’re here to answer any of your questions about Jerusalem real estate.


[ Download FREE PDF Checklist to Help You Through the Process ]