Selling real estate in Israel isn’t just a matter of listing the property and negotiating a price. It’s a legal transaction that demands precision, preparation, and foresight — especially when it comes to the seller’s obligations. Below are the key elements every seller should understand before putting their apartment on the market.
Please note: If your apartment is in a new development and the construction has not been completed yet, before selling it you will have to get the consent of the builder and the bank providing the construction loan and guarantees, and it’s not a given that they will allow it. So there is a good chance you will not even be able to sell it before you take possession of the apartment.
1. Title & Registration: Where Is Your Property Registered?
Before anything else, you need clarity on the property’s legal status. Has the title been transferred fully to your name and are you the registered owner of the property? Is it registered in the Land Registry (Tabu)? The Israeli Land Administration? A title company (Chevra Meshakenet)? Or just as a lien on the land?
This matters. The method and timeline of transferring ownership depend on where and how the property is registered. Obtain a Land Registry Extract (Nesach Tabu) or Certificate of Rights (Ishur Zchuyot) (or equivalent document) and confirm ownership status, registration details, and whether there are any encumbrances.
If your property is still registered under a title company, obtaining the Certificate of Rights would cost slightly more and could take a little longer than getting a copy of an extract from the Land Registry. The process of registering a lien in the name of the buyer and transfer of title will also be a little more complex, there will also be additional necessary documents, and will take a little longer.
2. Mortgages & Liens: Plan for Removal or Transfer
A major component of any sale is managing existing financial burdens on the property. Sellers must:
- Obtain a mortgage balance statement
- Decide whether to pay it off upon sale or transfer it to a new property
- Obtain a Letter of Intent for repayment of the mortgage (if relevant – and is only valid for a short period of time)
- Coordinate lien removal (if relevant) from both the Land Registry and the Lien Registrar (a process that can take 30+ days)
Please note: You have the option of not repaying the mortgage (especially if your mortgage rates are good), and can roll it into a new property you buy. If you have not yet found a property to buy, Israeli banks may allow the mortgage sum to be held in a dedicated account until it’s rolled over to a new purchase.
Importantly, this timeline must be reflected in the payment schedule. A buyer cannot transfer title to the property while it is still encumbered by your mortgage.
3. Municipality Certificate
This is one of the certificates that the seller must provide to the buyer in order for him to transfer title. The certificate verifies that there is:
- No Arnona debt to the local municipality
- No betterment tax to be paid to the local municipality
Your attorney should reach out to the local municipality to check if there is any betterment tax you must pay, as this is something that could affect the sale price or your decision to sell at all, as it could amount to a significant amount.
Once the sale agreement is signed, your attorney should reach out to the local municipality to order this certificate to be delivered to the buyer upon transfer of possession, or some funds from the last payment will have to be held in escrow until the certificate is provided.
4. Capital Gains Tax (Mas Shevach) Certificate: Be Prepared
Capital Gains Tax in Israel is calculated on the real net gain, excluding inflation and costs you incurred during the purchase and sale of the property. These costs can include:
- Purchase Tax
- Betterment Tax (more on this topic soon)
- Agent fees for purchase and sale
- Legal fees for purchase and sale
- Renovations and upgrades
- Interest paid on your mortgage (not in all cases)
To prepare:
- Gather the original purchase agreement, legal and brokerage invoices, purchase tax receipts, and renovation expenses
- Update all sums to reflect their current value (linked to inflation indices)
- Ensure proper documentation is available to your accountant or attorney for tax calculation and reporting
- Make sure you save all the receipts, because without the receipts the Tax Office will not recognize the expenses
There are some circumstances under which you could potentially sell your property exempt or partially exempt from any capital gains tax. For example, if you are an Israeli resident, do not own any other property, and have owned the property for more than 18 months, you might be eligible to sell the property exempt or partially exempt from any capital gains tax (depending on the sale price). Another example, if you are neither an Israeli Resident nor a Citizen, and your property is over the Green Line, there might not be any Capital Gains tax to pay. Read more about Capital Gains Tax here.
Please note, if you are not eligible to sell your property exempt from Capital Gains Tax, the buyer must pay directly to the tax office an amount equivalent to either 7.5% or 15% (depending on when the property was purchased) once the buyer has paid 40% of the purchase price. If this comes out to more than the Capital Gains Tax due, you or your lawyer will have to work with the tax office to get an approval for a lower rate or on getting the difference back. This is not negotiable and a must under law, so you must take this into consideration when setting the payment schedule.
5. Contract Drafting: Seller’s Responsibility
In Israel, the seller’s attorney drafts the initial contract, which is then negotiated with the buyer’s attorney. This includes terms of payment, dates for vacating, lien and mortgage removal deadlines, and more. There are instances where the same real estate attorney will represent both sides, though this is not common and not recommended.
6. Foreign Sellers: Specific Power of Attorney Required
If the seller is not in Israel, a Power of Attorney (POA) is required for your attorney to be able to act on your behalf. The POA must include the details of the property, who the POA is given to, and the name of the buyer and seller. If signed outside of Israel, it must be either authenticated by the local Israeli embassy or consulate, or Apostilled (if the country of origin has signed the Hague Treaty).
General POAs are not accepted.
7. Additional Liens: Know What’s on the Property
It’s not uncommon to find other liens or encumbrances on the property—especially in cases where:
- Parents helped purchase the apartment and placed a lien to prevent its sale
- The owner took out a non-bank loan secured by the property
- The owner has other debts or court ruling against them
- In some cases, illegal construction could be noted on the extract as a Cautionary Note
These issues must be resolved before closing, either by full repayment or clear contract clauses. Otherwise, the buyer will be unable to register their rights, secure financing or be second in line for the rights – which of course could prevent, delay or even cancel the sale.
Selling in Israel requires more than paperwork—it requires foresight. Every element, from lien removal, mortgage repayment to tax calculations and payment, must be synchronized in a timeline that protects both parties. A real estate attorney experienced in navigating these steps is not just helpful—it’s essential.
If you’re considering selling your property in Israel in the near future, get in touch with us – we’re happy to kickstart the process!
