Money Saving Tips

You are looking to purchase a property in Israel, but you are unfamiliar with the language, cultural, bureaucratic, legal and economic aspects of such an important transaction!  Read on to discover some of the most useful money saving tips to bear in mind when purchasing a property in Israel.

Purchasing from a contractor:

Negotiating the price: Most often, contractors will link their prices to the Building Index.  The base rate is set at the time of signing the contract, and if the building index increases by x%, you, the purchaser, must pay the increase.  It may be wise to link it to the cost of living index- which may be more stable at the time you sign the contract. This can save you thousands of Shekels.   In addition to this, you could choose to pay more of the purchase price earlier rather than later and limit your exposure.     Be aware however, by paying the contractor earlier, he has more of your money in his account and if there is a dispute later, you may wield less power… if you decide to take this route take advice before doing so. The index is published by the Israeli Bureau of Statistics, and you can view its history and track it at

Changes in the plans:  Often the builder provides a standard apartment, and you may want  to make changes based on your specific needs.  Make sure that you have inspected the building plans very carefully before signing the contract – you may be able to negotiate improvements into the body of the contract free of charge. You may want, for example, extra electric sockets or stainless steel sinks, so try to negotiate this into the standard  plans, and make sure you include these additional items within the contract.

Make sure that you notify the contractor of  any changes as soon as possible.  If you want a wall to be moved before it is built, the contractor may make a minimal charge or even no charge at all. However, if you ask him to move a wall after it has been built and the electrics have been installed it is likely to cost  a great deal of money!

Lawyers Fee: When purchasing property from a contractor it is the norm that the purchaser pays for the contractor’s lawyer. This can be costly – sometimes as much as 2%+VAT!  In this case, there may be a uniquely Middle Eastern way of saving money… Yes- you guessed it, you haggle!  Often the lawyer will reduce his price by as much as 0.5%.  Unless you try you will not find out!

Purchasing a Second Hand Property:

Purchase Tax: Purchase tax is a percentage of the negotiated price.  One way to reduce the amount of purchase tax paid is to make two separate contracts. One contract will relate to the purchasing of the property and another to the furnishings being left in the property.  This will lower the price in the property contract (as it will not include furnishings) and so reduce the amount of purchase tax due.   In some cases being an Oleh Chadash will also entitle you to a reduction in purchase tax.

Building Engineer: Hiring a good building engineer coupled with some tough negotiating skills may also save you money. Most building engineers will pick up some faults with the property and they will quantify how much it will cost to repair. This may give you leverage to pressure the seller to reduce his fee.

Deposits: The seller has paid a deposit for his water meter, gas meter and electric meter to the various utility companies.  Here’s a great money saving tip – if you disconnect the utilities and the have them re-connected, this will cost you a lot of money, so instead, simply reimburse the owner for the deposits that he placed, and transfer the utility onto your name- which is a lot cheaper!!

This article has been re-printed with the kind permission of Simon Seitz of

© Copyright IsraMortgages 2017