What is necessary to know when buying a new apartment?
When coming to buy an apartment, you must take several main factors into consideration, the primary one being the residential location. Before buying an apartment you must choose location that suits you. This can be more important than the actual apartment. Think about important day-to-day aspects such as cultural centers, schools, kindergartens, public transport or anything else you might need.
Choosing the Apartment
you should consider seriously about your needs and your life in general. Are you buying an apartment to live in for a short time or do you want to live there for a longer period of time? Are there plans to enlarge the family? So maybe in the future you will need a larger apartment? Is the floor level important to you, or does it matter if there is an elevator or not? Do you prefer a rear-positioned apartment or one facing the front of the building?
Who is selling the apartment?
After you have chosen the type of apartment you want to buy, you can chose between the particular sources selling apartments:
* A company of construction contractors, who plan, build the apartment and also sell it.
*A public company.
* A government body.
*Real Estate agents – who sell apartments for clients (companies or private individuals).
What is necessary to clarify before buying an apartment?
Before you buy an apartment you must clarify first of all whether the apartment is registered in the Israel land administration office. Who owns the rights to the apartment, what are these rights? Are there banking attachments, legal issues or warning notices in regard to the apartment? Do you hold the block and plot number of the property? You will be able to find out about all these details by obtaining the land administration extract (nesach tabu). You can examine this extract in the land administration and registry website in the ministry of justice or from institutions such as Israel post or other procedures.
Buying an apartment from a contractor
Before you go to buy an apartment from a contractor, search for details about him. For example, whether he is listed in contractor records and whether it includes anything concerning his professional classification (in which fields he is permitted to work) and his financial classification (what is the scope of his work). If it is a building company, you can find details about it in the registration of companies in the Ministry of Justice.
It is always worthwhile visiting other projects built by the contractor; you can appraise the apartments, the building and other details.
In addition you should confirm that the building has the correct legal permits for building – this you can check in the local council that provides building permits to contractors and building companies.
You should also go to the tax insurance and the tax property administrations in order to examine if the contractor or building company has the necessary legal permits that will enable you to register the apartment in your name in the land administration.
You have chosen an apartment – congratulations!
Firstly, you must sign a letter of agreement with the individual selling the apartment or with the person that has power of attorney for sale of the apartment (for example, the real estate agent). The letter of agreement is a contract to all intent and purpose (it is a kind of précis of the full contract that will be signed at a later stage); it has legal validity and represents mutual commitment regarding purchase of the property.
The contract of purchase
Probably the purchasing contract is the most important contract that you have ever signed in your life therefore you must read it very carefully, read every single paragraph and it is advised not to do this alone, but to take advise from professionals that you can trust and primarily you should be accompanied by a lawyer who specializes in real estate. According to the hire-purchase law his payment will be one and a half percent of the apartment value. During the negotiation between you and the seller many details will arise such as different guarantees and commitments regarding dates of execution, installation of the kitchen, bathroom and other installations.
When you come to sign the contract, you must examine all the agreed details meticulously; in the contract of sale everything must be clearly and unambiguously stated that the contractor is responsible for these details and for compensation if completion of the apartment and your entry is delayed.
If you are purchasing an apartment from a contractor, you must ensure that he has listed the technical details of the apartment accurately, and that you have a paragraph in the contract that enables changes or additions at the contractor’s expense.
When you are examining the contract it is important to examine the following points in particular:
The final cost of the apartment and if it includes the value added tax. If the cost does not include it, you will be asked to pay it in addition; this is a considerably high sum: 17% of the apartment value.
Land administration registry – the contractor is obliged to state on what date he plans to pay for the registry of apartment ownership in your name.
Parking - does the apartment have a parking area close by? This must be stated in the contract, and should include your actual parking position. This must appear in the land administration extract.
Is there access to the shared roof of the building? Is the parking shared? Is there a garden by the building in the grounds? You must check exactly what shared property in the building is and what is registered in your name.
In the new apartment – the contractor is obliged by the regulations of planning and building law to install a solar water heating system – paid by him. Furthermore, the contractor - in the framework of the cost and not in addition to it – will connect the building and the apartments to the electricity and water supply and the telephone.
Receipt of apartment – complete and in full working order; this is your responsibility.
Taxation of the apartment
Immediately following the purchase of an apartment you are obliged to send a statement to the land tax authority. It is important to send it in time in order to avoid a payment of a fine or interest. When you buy an apartment you must pay purchase tax. The payment depends on the cost of the apartment – the higher the cost of the apartment the higher the tax payment. Purchase tax varies between half a percent to five percent and there are conditions, discounts and even exemption in specific cases, for example – the purchase of a first apartment up to the sum of 1,350,000 NIS is exempt from tax.
On the tax authority website you can find the calculator for calculation of purchase tax and it is also possible to find additional details about purchase tax in the tax authority: the guide to apartment purchasers and sellers. Full information about filling the necessary forms and sending them can be found in the guide to purchasers and sellers of apartments on the tax authority website.