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A native new Yorker, Shelly Levine is owner and manager of Tivuch Shelly Ltd., a leading real estate company that services all of Jerusalem and its surrounding areas and specializes in English-speaking clients.
Click here to send us your questions for Shelly, please include your name, city and country.
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Dear Shelly: When an apartment is advertised as being a certain size (for
example 80 square meters), what does that number include and not include(for example merpeset, patio, storage, etc.)?
Dear Stan: If it is a second-hand house, the best way to check the meterage is to review a municipal tax bill (arnona) to determine how much the city is charging in taxes per square meter. That should be one good indicator. Gardens, balconies, storage rooms are almost never included in the count. What is usually included is part of the communal hallway and lobby area.
Hello Shelly: As a former resident of Gush Katif, I am presently living on Kibutz Karmiya near Ashkelon. The company that made our house is offering to sell it. How can I check to see if the price is fair?
Dear Avi: Please call up the closest real estate agency in the local area and see if anything has been sold recently. That's certainly the easiest way to do it. If nothing has been sold on that specific kibbutz, then consider calling around to local moshavim or regional councils to pose the same question. They will be happy to furnish information. Most local councils keep track of all new building projects in the area, with regular monthly updates, including where, when and how much.
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Q: I am an olah from 1995. I became a kibbutz member immediately and have been ever since. Our kibbutz is in the last stages of privatisation and we have a place to build on but not enough money. Am I entitled to any mortages or is it too late?
A: Your rights might have been frozen as an oleh chadash since you were actively on a kibbutz. You need to check this out immediately. However, even if there is a problem on that front, you are nevertheless entitled to rights as a first-time buyer like all other Israeli citizens. The reason it's important to push for oleh status is that you would pay only 0.5% of the purchase tax of a new property, as opposed to the higher rate of 3-5% as non-olim. You should direct your questions to your bank and with the AACI (if you're from the US or Canada.)
Q: I made aliya nine years ago, at the age of 19, and was not advised otherwise, but was added to my mother's teudat oleh (certificate of immigration) automatically since I arrived in the country eight months after she made aliya and was making aliya here instead of through the Jewish Agency in the USA. My mother will not be using her rights to buy a home here. I
am now married to an Israeli, and we have one child. Is it possible to have the housing rights from my mother's teudat oleh transferred to my
name in order to purchase the house? If not, can my mother and I buy the house together, and what would that require?
A: Firstly, you and your husband are entitled to rights as a young first-time
home buyer as Israelis which is quite equivalent in many cases to the benefits you would be entitled to as a new immigrant.
But yes, you can include your mother on the contract with you, if her rights are still intact and available to her.
The other issue: You must go to the bank and find out what you and your husband are entitled to alone and what you're entitled to with your mom.
There are two issues to consider: If you go the route with your mom, she will pay only .5% of the purchase tax (mas recheisha) only one of the
parties on the contract must have oleh rights to secure this tax discount.
Otherwise it averages 3.5% The other thing that you must take care of at contract time is that your mother wills her portion of the house to you.
If not, there are government laws that would distribute her portion to all children, spouse, etc.
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Q: Although we feel comfortable to buy a house and begin paying a mortgage, we are having difficulties coming up with the down payment.
Are there down payment-type mortgages we could get to help us?
Would you suggest renting for a couple more years and saving for a down payment? What is the minimum we would have to put down for a house?
A: Today in Israel, banks are ready to give you up to 93% of the cost of the house as long as you can demonstrate that you will be able to keep up with the payments. There is also an insurance program called EDI that will give you truly maximum proportions of the cost of the apartment you want to buy. The key, or course, is to ensure that you will be able to pay back what you intend to borrow. The kiss of aliya death is shouldering loans you cannot pay back or financial pressures that don't let you breathe. There's no doubt that prices in Israel are heading up when you consider rising anti-Semitism overseas, increasing Western aliya and investment, etc. It's important to buy a home and get into the market as an owner. The key is your monthly earning power, more so than the initial down payment.
Q: I made aliya in 1992, but had to move back to the States in 1994 for family reasons. I am now thinking about moving back to Israel in 2006 or 2007 with my daughter who is Israeli-born. Am I still entitled to financial help for rent or buying an apartment? My daughter is almost 12 years old. Does she have any financial rights? Her dad by the way lives in Tel Aviv.
Also, are Netanya or Ra'anana still places with a large percentage of English speaking residents?
A: Housing rights last between seven to 10 years. If you were olim in 1992 and left two years later, then you should still have years of olim rights left for your use assuming you did NOT use them to buy a house, or appliances or a car. Any rights not used then should be available to you now.
Your child probably has rights as an Israeli citizen like all other young Israelis who also get incentives as first time buyers from the government.
Netanya and Ra'anana still have large percentages of English speaking residents, but the new hot areas these days are definitely Modi'in and Beit Shemesh, along with parts of Jerusalem and Ma'aleh Adumim.
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Q: I made aliya in 1989 and have used most of my
oleh benefits except those related to buying a home. After eight years in Israel my husband and I decided to move back to the US. We have been here now for almost seven years and have decided to move back to Israel and buy a home there. Can I still use my benefits as an oleh hadash to purchase an apartment in Israel?
A: If your total time living in Israel was UNDER 10 years, then you might still
be able to activate your home-purchase rights, assuming you have never owned a house here until now. But Israelis are also entitled to "rights," and even in cases where olim might have lost out on their rights, they are still likely entitled to "first-time buyers" rights which are not that much different from those of olim.
The only thing you should carefully calculate your "time" for, is that for seven years, newcomers have certain tax benefits on the PURCHASE tax, so
that could help you, also, if you qualify time-wise.
Q: We are contemplating splitting our time (3-6 months at a time) between our home in the US and Jerusalem in the future (five years out).
My thinking is that we could rent in Jerusalem rather than buy and leave the apartment empty for chunks of time. Could you comment on the
wisdom of renting vs. buying in our circumstances?
A: Rentals in Jerusalem are sky-high! Even things like heating expenses in the winter - whether you are here those months or not - hikes your expenses. City taxes are paid by you, the renter, not the owner!
For short periods you might look toward a "tourist apartment," where a monthly rental might be higher, but it's furnished, you only pay for what you get, etc.
However, I am a strong advocate of BUYING. Your equity will be great and will appreciate as a blue-chip investment. You will have it forever to live in, you can shape and furnish it in your own style, etc. Think about it.
Q: My wife and I are planning to make aliya in the late spring or early summer of 2006. We are trying to decide whether to buy or rent
initially. Is real estate in Jerusalem, for example, a sound enough investment so that buying is not likely to harm us financially should
things not work out? We thought that if we purchased, we would know how much space we'd have for our furniture and wouldn't have to store
it here for a long, expensive period.
A: The answer to your question is to BUY. Why pay rental fees when you could use the same
exact money to repay a mortgage and end up owning your home?
In Jerusalem, there is rising demand from MANY newcomers from the US, France, UK, etc., and there is no such thing as almost any real estate
investment in Jerusalem not being a long-range sure-thing winner!
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Q: I am so happy I found your column on jpost.com. I am 29 and live in NYC. I work in real estate in New York and I will be coming to Israel in December for the third time. I will be on a program called Volunteers For Israel. I am looking to buy an apartment in the Jerusalem area. I know it's a tough question, but what can one expect to spend on a decent one-bedroom aprtment? Also, am I eligible for zaka'ut?
A: The market for one bedrooms in Jerusalem is extremely limited. There are some old apartments built in the 60s that might have what's called studios, but very little built in the past 20 years have less than two bedrooms. The differential, by the way, between one and two bedrooms is relatively small.
Q: I'm an Israeli citizen, but live in the USA as a"permanent resident." I have an apartment in Israel that I want to sell. What taxes willl I pay as a seller in such a transaction?
A: The good news for you is that taxes are liable when you buy an apartment (purchase tax by the buyer), not by the seller. The only other consideration might be if you own more than one apartment and sell more than one in a period of less than four years. If this does not apply to you, you should be home free.
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Q: I purchased an apartment less than two years ago as a single oleh and am now getting married to an Israeli woman. My mortgage is about a quarter entitlement and the remainder is half dollar linked and half shekel linked. Is there any way to or point in trying to rework the mortgage to take advantage of my fiancee's entitlement, or is it more trouble than it is worth to make any change?
A: The only way a person can utilize a zakaut (subsidized government mortgage) is if he or she has never owned an apartment in Israel previously, nor has the spouse. Your wife would only be entitled to her "share" of any benefits if she now buys an apartment by herself, before the marriage, and it would be a relatively tiny entitlement as a single person. Once she's married to someone who already has gotten such benefits, her rights are negated.
Q: I am interested in getting a mortgage to build a house. How do I go about getting a mortgage for this and how do mortgages for building a home work? Are there any special mortgage related issues in building over the green line?
A: All banks provide mortgages to build private houses. The only difference between this and large projects is that the latter have bank guarantees, which secure the mortgage and the overall building process. Smaller projects such as single homes may not carry these very important guarantees. But the bank has special payouts and terms; it's slightly more difficult, but not insurmountable. Go to one of the larger banks like Tefahot or Leumi, not the smaller ones for these cases. These particular banks have been known to give mortgages over the Green Line. In fact my office marketed two communities over the line and we found mortgages for our purchasers - again, just a little more shoe-leather to find the right solution for your needs.
Q: Is there an age limit for people wanting to buy a house?
A: Great question! It's never too late to realize the dream of owning your own home in Israel. The only limitation is on long-term mortgages, which many banks will not be too keen to provide... unless you cover the mortgage with sufficient bond and/or life insurance. This is done on an individual basis, but in general, I encourage you to "get a piece of the rock."
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Q: We want to buy a property in Israel now, and make aliya in a few years. As the property purchase tax is higher for foreign residents than it is for new immigrants, is it possible to claim back the difference once we make aliya ?
A: You are permitted to recoup the tax differential only within 12 months. In other words, you must come on aliya, or at least become an oleh hadash no later than one year from the date the purchase contract is signed.
Q: We are interested in buying somewhere in Gush Etzion. Do you think it is a safe investment given the political times? Do you know if there are any new building projects over the next few years?
A: We know of several outstanding building projects in the Gush, from Efrat to the surrounding communities. This area's home values have fluctuated depending on how quiet or volatile the situation has been in the area, over the years. However, for the long run - and I am not a prophet - the entire country is solidly behind the permanent retention of this area. I think it's a safe bet.
Note: Shelly will be in London, UK, in mid-November.
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Q: We have just purchased a second apartment and the mas rehisha on it is six times the amount that we paid on our first
apartment (same size.) Why? Would this second tax go down if we sold the first apartment? Within what time frame? Do we then get a refund,or should we wait to pay the tax until after we sell the first apartment. The kablan of the second apartment doesn't want to give us the key until we pay the tax.
A: Mas rehisha is usally paid 50 days from the time of the sales contract on the property. The bill is usually sent directly from the government office to the buyer, not the seller. If you bought the first apartment as olim, then you would have received an incredibly reduced tax rate in this regard. But it is only applicable for one house, the first one, they buy in Israel.
Mas rehisha is much less for Israelis if they own only one house at a time, not two or more. The government will return the extra
money if you sell the first house within a year of the purchase of the second house. This is done because the government doesn't want people driving up housing market costs through widespread speculation.
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Q: When buying a house in Israel, what percentage of one's net income do the banks allow for repayment purposes? Do they only consider net income, or also that you will be getting a lump sum from keren hishtalmut in the future?
A: It is always healthy to stay under a one-third of total monthly income dedicated to mortgage pay-back. I truly believe that the absorption kiss of death is to buy more than one can initially afford. There is plenty of time to upgrade a little later on. Mortgages can be moved from one property to another without refinancing. The banks don't focus on the future so much, they really look at present day situation at the time they are granting the mortgage.
Q: Lastly, are your repayments of the loan from the Ministry of Housing included by the bank in the percentage of your net income or is the government loan totally not means-tested?
A: If a person has a government mortgage they can borrow more because the payback to the government source is less. Today there is an insurance company called EMI that will help out with any extra mortgage amounts required, so people these days ca borrow much higher percentages of the total purchase price than in the past. But remember, banks are in the business of lending money and making interest. Your interest is to be able to live comfortably with what the bank lends you... a significant difference!
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Q: Can you recommend a real estate attorney for the Tel Aviv area?
A: Best one I know is Shuki Diamant based in the Bursa buildings in Ramat Gan. His number is (03) 752 0140. Tell him you came from me and he'll treat you right! He's a great guy. Shelly Levine
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Q: What are some conditions to buying real estate on paper? Is this a good financial move to discount real estate? Are banks favorable? Can you recommend any new neighborhoods in the Jerusalem area that have this option? We would only consider a haredi area.
We missed out on Ramat Beit Shemesh 10 years ago. We are perfectly happy here in Lakewood, but have grand aspirations to live in the Holy Land. We appreciate your column and look forward to your response.
A: First of all, you did not miss out on Ramat Bet Shemesh. There are
wonderful new projects being built there today. I and many others represent these growth communities. Everyone who wants optimal equity does in fact purchase where possible on paper from plans. Second hand apartments are usually considerably more expensive. The builder needs money
to pump the prime, especially in the early stages of construction, and needs to feel momentum. That is when it is the best opportunity to buy - and there is no risk involved today.You actually pay the bank, not the builder, who keeps the funds in a closed account, releasing them only as the builder actually reaches specific construction milestones. The bank is responsible for the project, and should something happen to the builder, the bank will take responsibility and transfer building to another builder or return
Buying apartments on plans is the normal practice throughout Israel and is the way through which all the great new communities are being marketed.
Q: Is it possible to see on the internet the laws pertaining to Shlissel Gelt for a commercial propery?
A: Key money is an extremely archaic practice here. When the country first began, it was designed for people who did not have sufficient means to buy their own place. Today, the mortgage system in place is very efficient. With a very small downpayment, people are able to finance their own purchase.
These mortgages were not available in the old days. I haven't been involved in any key money arrangements for well over a decade.
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Q: I intend to purchase a house in Jerusalem and am trying to figure out how much I should put down as my down payment. I ask this because in America you can usually put down 15-20% and then have your mortgage payments equal your rent payments, but it seems that in israel that is not the case and that I have to put down closer to 50 or 60% of the value of the house, in order to get a mortgage payment which is
equal to a rent payment. Is this correct?
A: The rental market in Israel is softer than those of most other Western countries. This is due to the fact that 78% of adult Israelis own some kind of apartment or housing property by the time they are in their late 20s.
The bank will give you up to 85% of the purchase cost as long as you can demonstrate proof of pay-back capability. A Shekel mortgage linked to the Dollar runs approximately: Monthly payback of approximately $670 for every $100,000 borrowed - in Shekelim - over 20 years. I always recommend a Shekel currency mortgage because most people pay rent to you in Shekelim, and income is earned in Shekelim. If this house is an investment for you and you plan to rent it out, you can apply what I've said to do the
Q: I was wondering what the current interest rates on mortgages were. I can put down 20-30% of a price and want to know how long the terms are, and if payment in dollars would get me a break over paying a mortgage in shekels.
A: Is the house you have in mind an investment which you intend to rent out?
If so, then go with the flow for what works here in Israel, which is typically Shekel-based mortgages, linked to the dollar. You can get up to 85% of the total purchase price if you can demonstrate payback capability to the bank.
For "tourist mortgages," paid back in hard currency (i.e., US Dollars), the interest rate is 1.90% above the international LIBOR rate. Tourist mortgages end up being more expensive in several ways than Shekel deals.
Money might be lost every month in currency transfers, etc. Every case should be designed individually depending on what the ultimate purpose and plan for the apartment is (to live in? to let other family members eventually live in? to rent out as an investment?). Will you be working in this country and earning a Shekel salary? All these questions must be answered in order to make the best mortgage decision for you.
Q: How much should I pay per square meter for an old, second-hand apartment in Kiryat Yam (Gimmel), Israel?
A: It is not always best to evaluate one's apartment value on a "per meter" basis. What floor is it on? What part of the city is it located in? Does it have a separate entrance, elevator, how many steps? garden? good
neighbors? The best formula is to find a reliable Haifa-based real estate agent who knows the area well and can give you straight answers and sound advice.
Note from Cafe Oleh: If any reader would like to recommend a reliable Haifa-based real estate agent we would be pleased to pass on the suggestion.
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Q: I am about to sign a year's contract for a two bedroom apartment in Jerusalem. I can't read Hebrew and I can't afford a lawyer. I have heard that many people get ripped off by their landlords because they don't know their rights. I have also heard that the law is on the side of the tenant. Do you have any advice for me?
A: First of all, the person renting out the property is at greater risk than you. The reason is that if you do not pay the city taxes or phone bill, the owner has to find you to ensure payment. As long as the price is basically agreed on, and you check that all previous bills (water, electricity, phone, municipal taxes) are paid up, then there's very limited risk exposure to you. My suggestion is to ask the landlord if you can use a standard rental contract which can be purchased at any stationery store for about NIS 5. Have a Hebrew-speaking friend read and informally explain it to you, it's simple and direct and relied on by many Israelis. There's no need for expensive legal advice in most standard cases if you follow this formula.
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Q: I am considering buying an apartment and am trying to determine how much money I should put down, up front, when doing so. Is there a set percentage that the mortgage banks recommend or is it more a matter of what I want my monthly mortgage payments to be, or perhaps something else?
A: Mortgage banks usually require at least a 15% down payment to get the process moving, for shekel-based loans. This means that payments will continue in shekelim, of course. There is flexibility in terms of negotiations, should the bank feel even more confident in your stability of repayment. It is a sensible rule of thumb in Israel that one does not pay more than one-third of total monthly family income toward mortgages.
Q: Can you recommend a reliable real estate company to use when searching for an apartment to purchase or is it better to go with word of mouth? Before committing to a specific real estate company do I need to examine the company s official certification to make sure they are legit ?
A: Word of mouth is always helpful, but there is no substitute for competent professional services from credible professionals. It is always good to determine which agencies are specialists in the particular areas in which you are interested. Today, every real estate agent is required to have a certified license. Most building companies insist that their agents possess such certification.
Q: Can you recommend a good mortgage bank to use when purchasing a house? What types of things do I need to consider before settling on a mortgage?
A: There are different mortgage options. Those that are paid back in shekelim every month are designed for people with shekel income. Banks offer different options and terms at different times. When you are ready to take out the mortgage, you must shop around at two or more of the larger banks to see what terms they are offering at that period. They are ready to negotiate! It is acceptable to tell each one precisely what other banks are offering, and challenge them to do better for you. Tourist dollar-based mortgages are usually linked to the international libor rate. Although less than for shekel-based mortgages, there is still some degree of negotiations involved; these are more typically for people living overseas or living in Israel with foreign currency income.
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