Buying property in Israel is exciting — picturing yourself in your new home, hosting friends and family, and exploring the neighborhood. But the listed price is just the beginning. There are several hidden costs that can add up quickly, especially for foreign buyers. Knowing these upfront can save you stress, surprises, and money.

Purchase Tax (Mas Rechisha)

One of the largest hidden costs is the purchase tax, known as Mas Rechisha. For foreign buyers, this starts at 8% of the property price and can increase depending on the property type. This tax is mandatory and is calculated on the purchase price — there’s no way around it. First-time Israeli buyers or Israeli residents may get reduced rates, but for international buyers, it’s essential to factor this into your total budget. Ignoring this number can make a property look cheaper than it really is.

Attorney’s Fees

Hiring an attorney is not optional — it’s a legal requirement in Israel. Attorney fees generally range from 1–1.25% of the purchase price, plus 18% VAT. Your lawyer’s role goes far beyond signing papers: they perform all the due diligence, review contracts, check for any liens or legal issues, and make sure the property is exactly as represented. Since Israeli contracts have no contingencies, having your attorney handle inspections and approvals before signing is critical. A small investment here can prevent big headaches later.

Mortgage Broker Fees

If you’re financing your purchase with a mortgage, most buyers work with a broker. Typical fees are around 1% of the loan, plus 18% VAT. Brokers not only save time but can also help negotiate better interest rates and terms with the banks — especially useful for foreign buyers navigating Israeli banking regulations. Even though it seems like a small percentage, it’s an essential part of your total budget.

Engineer and Inspector Fees

Before committing to a purchase, hiring a qualified engineer or property inspector is highly recommended. Fees usually start at 2,500 NIS, plus 18% VAT, depending on property size. These professionals inspect structural, electrical, and plumbing systems to ensure there are no hidden defects. Skipping this step might save a few hundred shekels now, but could lead to thousands in unexpected repair costs later.

Broker Fees

Real estate brokers in Israel are standard, with fees typically 2% of the purchase price plus 18% VAT. Brokers provide more than listings: they negotiate deals, advise on market trends, and guide you through paperwork and regulations. Especially in competitive markets, a skilled broker can be the difference between securing your dream property and missing out.

Other Costs to Budget

Even after covering the main closing costs, there are additional expenses that can impact your budget:

  • Maintenance fees (chevra meshuntet): Regular building fees can fluctuate and sometimes increase unexpectedly.

  • Renovations and upgrades: Most apartments require at least cosmetic changes, and older buildings may need more extensive renovations.

  • Neighborhood-specific fees: Arnona (property tax), parking spaces, storage, or space for a sukkah can all add to costs.

  • Practical costs: Utilities setup, furniture, and moving expenses are often overlooked but necessary for making the house a home.

Bottom Line

Closing costs in Israel can easily add 12–15% on top of the purchase price. By planning ahead, understanding all the numbers, and working with a trusted team — agent, lawyer, and accountant — you can avoid surprises and make the process smooth and enjoyable.

Disclaimer: This article is not data-based but rather based on Ben Levene’s personal market experience and opinions. No decisions should be made without thorough due diligence and professional financial advice.

 Ben Levene, CEO of CapitIL Real Estate, brings over 15 years of expertise in the Jerusalem real estate market. For inquiries, reach out to him at [email protected].