Buying Property in Israel: A Guide for US Residents

An American buyer once asked me, halfway through a deal on a Jerusalem apartment, where the escrow company was. There is no escrow company. Israel does not run real estate transactions the way the United States does, and that single difference, multiplied across the purchase tax, the land tenure system, the financing, and the IRS reporting that follows you home, is why a US resident needs to approach an Israeli purchase on Israeli terms rather than American ones.

The good news is that Israel welcomes foreign buyers and the path is well worn. Thousands of Americans own apartments in Tel Aviv, Jerusalem and Netanya. What follows is the framework you actually need: what you will pay, what you can and cannot buy, how to do it from New York or Los Angeles, and what your accountant will need afterward.

Yes, You Can Buy, With Two Caveats

There is no general bar on Americans owning Israeli real estate. You do not need citizenship, residency, or any religious status to buy a privately owned apartment. Our overview of how non-residents buy property in Israel covers the mechanics in full, but two caveats specifically catch foreign buyers.

The first is land tenure. A large share of Israeli land is not freehold but leased from the state through the Israel Land Authority (Rashut Mekarkei Yisrael). Where the apartment sits on ILA land, transferring the lease to a non-citizen can require ILA consent, and the lease terms differ from outright ownership. Most urban apartments are either freehold or on long, renewable leases that pose no real problem, but the status must be checked in the Land Registry (Tabu) extract before you commit.

The second is agricultural land, which is largely closed to non-residents and carries its own approval regime. If a deal looks unusually cheap for its size, confirm it is not agricultural or restricted before you fall in love with it.

What You Will Pay: Purchase Tax

Purchase tax (mas rechisha) is the single largest transaction cost, and non-residents pay more than Israelis. An Israeli buying a first and only home enjoys a zero bracket on the lower tranche. A foreign resident does not. You pay from the first shekel. Our Q&A on Israeli purchase tax for non-residents sets out the brackets, and the figures matter enough to repeat here.

In Practice: Under the Real Estate Taxation Law 1963, a non-resident buyer pays purchase tax of 8% on the price up to NIS 6,055,070 and 10% on the portion above, from the first shekel. On a NIS 4 million apartment (about USD 1.08 million) that is NIS 320,000 in purchase tax alone. The brackets are frozen at 2024 levels through the end of 2026 by temporary order. The buyer must file a self-assessment declaration with the Israel Tax Authority (Rashut HaMasim) within 30 days of signing and pay within 60 days, before the Land Registry will register the transfer.

There is a meaningful exception worth planning around. A buyer who is making aliyah, or who genuinely intends to become an Israeli resident within two years, can access lower rates. New immigrants (olim) qualify for a reduced purchase tax track, roughly 0.5% on the first tranche of about NIS 1,988,090 and 5% above, available within a window from one year before to seven years after aliyah. If a move to Israel is anywhere in your plans, the timing of the purchase against the timing of your aliyah can save tens of thousands of dollars. If you have no Israeli home and will not become resident, budget for the full 8% to 10%.

How an American Buys From Abroad

The transaction runs through lawyers, not agents and not escrow. In Israel, each side's attorney handles the conveyancing, drafts and negotiates the purchase agreement (heskem mehker), conducts the due diligence in Tabu, and registers the transfer. Expect a buyer's legal fee of roughly 0.5% to 1.5% of the price plus VAT.

You do not need to be in the country. The standard route for a US resident is a power of attorney signed before a notary public in your state, apostilled by the Secretary of State of that state, then sent to your Israeli lawyer. With that, your lawyer can sign the agreement and complete registration without you boarding a plane. Get the apostille right the first time, because a notarization apostilled by the wrong authority is the most common document failure we see.

Money is the other piece to arrange in advance. You will need an Israeli bank account to receive your funds and pay the seller, and opening one as a non-resident takes time and documentation under the banks' anti-money-laundering rules. Start that early; our guide to opening an Israeli bank account as a non-resident explains what the bank will ask for. When you wire a large sum from the US, the Israeli bank will require clear evidence of the source of funds before it lets you use the money.

In Practice: Where the apartment sits on land managed by the Israel Land Authority, transferring the lease to a non-citizen buyer can require ILA consent, a step governed by the authority's leasing rules rather than the Land Law 1969 freehold regime. Obtaining consent and completing registration in Tabu commonly adds 6–12 weeks to the timeline and a few thousand shekels in fees and lease capitalization (hivun) charges. Confirming the tenure status from the Tabu extract before signing avoids discovering this after your deposit is committed.

Financing as a Non-Resident

If you are not paying cash, Israeli banks will lend to non-residents, but at lower loan-to-value ratios than they offer residents. A non-resident American can typically borrow up to around 50% of the property value, against up to 70% to 75% for an Israeli buying a first home. Rates and conditions are tighter, and the bank will scrutinize your US income and the provenance of your equity. The full picture is in our guide to how non-residents get a mortgage in Israel. Build the lower leverage into your budget early, because an American who assumes 75% financing and discovers a 50% ceiling has a funding gap to close fast.

The IRS Does Not Forget

Owning Israeli property does not end your US obligations; it adds to them. A few points that catch American owners off guard.

The purchase is not a US taxable event, and foreign real estate itself is not reported on the FBAR, because real property is not a financial account. The account you open in Israel to receive rent or hold funds, however, is fully FBAR and FATCA reportable once it crosses the thresholds. If you rent the apartment out, the rental income goes on your US return on Schedule E, and you may use the Israeli tax paid as a credit. When you eventually sell, the US taxes your worldwide capital gain, and you claim a foreign tax credit on Form 1116 for the Israeli betterment tax. We cover the sale side in our Q&A on US capital gains tax on selling Israeli property.

Estate planning deserves a thought too. A US person's worldwide estate, Israeli apartment included, falls within the US estate tax even though Israel itself charges no estate tax. Most owners sit comfortably under the federal exemption, but the interaction is worth understanding, especially for larger holdings; see our guide to US estate tax on Israeli assets.

What Often Goes Wrong

Common Mistake: American buyers budget for the price and a little extra, then are blindsided by purchase tax. On a NIS 5 million apartment (about USD 1.35 million), a non-resident pays roughly NIS 400,000 in mas rechisha, due to the Israel Tax Authority within 60 days of signing. Buyers who did not set this aside have had to scramble for funds mid-transaction or, worse, breach the agreement and risk losing their deposit. Run the purchase tax number before you make an offer, not after.

A second recurring error is treating the Tabu extract as a formality. The extract reveals liens, leasehold status, building violations and existing caveats. Skipping a proper title check, on the assumption that a US-style title company stands behind the deal, is how Americans end up buying into a problem no insurer will cover.

Practical Checklist

• Pull and review the Tabu extract to confirm freehold or leasehold status, liens and caveats before signing
• Calculate purchase tax at the non-resident 8% to 10% rates and set the cash aside
• If aliyah is in your plans, weigh whether to time the purchase to access olim rates
• Open your Israeli bank account early and prepare source-of-funds documentation
• Sign your power of attorney before a US notary and have it apostilled by the correct Secretary of State
• Confirm your financing ceiling with an Israeli bank before committing, expecting around 50% LTV
• Brief your US accountant on rental, FBAR, FATCA and eventual capital gains reporting

Speak With an Israeli Attorney

Buying in Israel from the United States is entirely manageable once the purchase tax, the title position and the remote signing are handled correctly from the start. We represent American buyers end to end, from the Tabu due diligence and the purchase agreement to the registration and the figures your US accountant will need.

Contact us for a confidential initial consultation.