Buying Property in Israel from the USA

Can an American buy property in Israel?

Yes, and the question comes up so often that it has its own page. Israeli law puts no condition of nationality, residence or religion on buying an apartment, a house or a plot. A buyer with a US passport and no Israeli connection signs the same contract (heskem mechira, the sale agreement), goes through the same lawyer and registers at the same land registry (Tabu) as an Israeli. The only land you cannot buy outright is state land leased through the Israel Land Authority (Minhal), where a non-citizen holds a long lease rather than a freehold; in practice that covers mostly older housing and a few areas, and your lawyer will tell you which registry the property sits in.

What does change with your status is money: the purchase tax schedule, the share of the price a bank will lend, and the paperwork at the bank. The rest of this guide is about those three things, plus the mechanics of doing it from the United States.

Moving dollars to shekels

Every shekel you pay the seller starts as a dollar in a US account. There are two ways to move it. A bank wire from your US bank to the lawyer's escrow account or to your Israeli account is simple but expensive: the US bank charges $25 to $50, the Israeli bank takes a receiving fee and, above all, converts at a spread of 1 to 2% over the mid-market rate. On $750,000 that spread is $7,500 to $15,000. A currency broker (specialist FX firms licensed in the US and Israel) converts at a spread of 0.2 to 0.6%, wires in shekels and, crucially, can lock a rate for a future date.

That last point matters because of how Israeli contracts are paid. A second-hand purchase typically runs 10–20% at signing and the balance within 2 to 6 months. A new-build bought off-plan (see the developer guide) is often sold on a 20/80 schedule: 20% at signing and 80% at delivery, two or three years later. Between the two dates, the dollar can move 5 to 10% against the shekel. On a ₪2.5M apartment with ₪2M still to pay, a 7% move is ₪140,000, or roughly $40,000, in either direction. A forward contract through a broker fixes the rate on part or all of the balance; a US dollar deposit at the Israeli bank is the other common hedge.

Whichever route you take, the Israeli side will ask where the money comes from. Israeli banks apply anti-money-laundering rules strictly: statements showing the savings, the closing statement of a US property you sold, a gift letter, a 401(k) or brokerage liquidation confirmation. A wire that arrives without a paper trail sits frozen for weeks, and contracts carry late-payment penalties. Build the file before the first transfer.

FATCA, the W-9, and why some Israeli banks hesitate with Americans

FATCA (Foreign Account Tax Compliance Act) is the 2010 US law that requires foreign banks to report accounts held by US persons to the IRS. Israel signed an intergovernmental agreement in 2014, and every Israeli bank now screens new customers for “US indicia”: a US passport, a US birthplace, a US address or phone number, a green card. If any appears, the bank asks you to sign a W-9 (giving your Social Security number) and reports the account balances and income each year through the Israel Tax Authority. Non-US persons sign a CRS self-certification instead, which does the same thing for the other OECD countries.

Signing the W-9 is not optional: a bank that cannot classify you will not open the account. And because the compliance cost of a US customer is high, some branches, especially small ones, decline American retail customers or limit them to basic accounts. The large banks have dedicated international or “foreign residents” desks that handle US files routinely: Mizrahi-Tefahot (the biggest mortgage lender, with English-speaking branches in Jerusalem, Ra'anana and Netanya), Leumi and Hapoalim through their international divisions in Tel Aviv, Discount through its private banking unit, and Bank of Jerusalem, which has long specialised in non-resident mortgages. Go to those desks rather than a neighbourhood branch.

Opening the account from the US is possible at most of them, in 1 to 3 weeks, either by power of attorney to your lawyer or by a video interview with identity verification. Bring a passport, proof of US address, the W-9, a brief description of the purchase and the source-of-funds documents. An Israeli account is not required for a cash purchase, since the lawyer's escrow account can receive the funds, but it is essential for a mortgage and convenient for municipal tax (arnona), the building committee (vaad bayit) and utilities afterwards.

Getting an Israeli mortgage as a non-resident American

Israeli banks lend to Americans who live in the US. A mashkanta (mortgage) for a non-resident follows the rules described in detail on the non-resident mortgage page; here is what is specific to a US borrower.

US income is accepted: W-2s or 1099s, the last two years of Form 1040, three months of pay stubs and bank statements, often with a certified translation. The bank converts the income to shekels at a conservative rate and applies a 10–20% haircut for currency risk, then caps the monthly payment at 35–40% of what remains. A household earning $15,000 net a month is read as roughly ₪43,000 rather than ₪51,000. Loans run up to 30 years, at least one third must be at a fixed rate, and the usual tracks are prime (4.75% minus a margin), fixed unlinked (5.0–5.5% for a non-resident) and fixed CPI-linked (2.9–3.3% plus the madad, the consumer price index). Life insurance and building insurance are compulsory; above 60 the life policy is the step to anticipate.

Some American buyers skip the Israeli mortgage and borrow at home instead: a cash-out refinance or a home equity line on a US property, at US rates, with no Israeli paperwork. The trade-off is a dollar debt against a shekel asset, and the US lender's own limits. Many buyers combine both: equity from the US for the down payment, an Israeli mortgage for 50%. Run the numbers on the mortgage calculator with the non-resident profile before you look at listings.

Purchase tax for a US buyer: 8% and 10%

Mas rechisha (purchase tax) is the one cost that hits a non-resident hardest. A resident buying a sole home pays nothing on the first ₪1,978,745 and then 3.5% and 5% by bracket. A non-resident is taxed on the “additional home” schedule, with no zero bracket: 8% up to ₪6,055,070 and 10% above. The thresholds are frozen until 15 January 2028, so the 2026 and 2027 figures are those of January 2025. The return is filed within 30 days of signing and the tax paid within 60 days; your lawyer does both.

Two exits exist. A buyer who becomes an Israeli resident within two years of the purchase, and whose Israeli apartment is their only home, can ask for reassessment on the resident schedule and recover the difference. And an oleh buying a sole home between one year before and seven years after aliyah pays 0% up to ₪1,978,745 and 0.5% up to ₪6,055,070, for purchases made between 15 August 2024 and 15 January 2028. If aliyah is on the table, the timing of the contract matters more than the choice of neighbourhood; see the buying as a new immigrant page and the purchase tax calculator.

Worked example: a ₪2.5M apartment in Jerusalem bought from New Jersey

The same couple buying the same apartment as new olim would pay ₪2,606 of purchase tax instead of ₪200,000 and could borrow 75%: cash needed falls to about ₪735,000. The same apartment through a bank wire instead of a broker would cost roughly ₪20,000 more in exchange spread. Each line of this budget is explained on the closing costs page.

Power of attorney from the United States

You do not sign in Israel; your lawyer does, under a yipui koach (power of attorney) drafted by them in Hebrew with an English translation, and limited to this purchase. Two ways to make a US-signed document valid in Israel:

1. US notary + apostille. Sign before any notary public in your state ($5 to $25 a signature, more for a mobile notary). Then obtain an apostille from the Secretary of State of that state ($10 to $50, same day in person in New York or California, one to three weeks by mail). Israel and the US are both party to the Hague Convention of 1961, so the apostille replaces any consular legalisation. The original is couriered to Israel.
2. Israeli consulate. Sign at an Israeli consulate, where a consul authenticates the signature with no apostille needed. Consulates sit in New York, Los Angeles, Miami, Chicago, Houston, San Francisco, Atlanta and Boston; appointments are booked online and slots can be two to four weeks out. The lawyer sends the text in advance.
3. Send the original. The Tabu and the banks require the original document, not a scan. Allow a week for the courier and keep a certified copy.

The bank's loan documents and the life insurance questionnaire can be signed the same way. Some banks insist on their own form of POA, so ask before the consulate appointment. The power of attorney page covers what powers to grant and what to withhold.

The US tax side, in broad strokes

Buying an apartment in Israel triggers no US tax. There is no federal reporting of real estate held directly in your own name: the apartment does not go on the FBAR or on Form 8938. What is reported is the Israeli bank account: on the FBAR (FinCEN Form 114) once the aggregate of your foreign accounts exceeds $10,000 at any point in the year, and on Form 8938 above the FATCA thresholds ($50,000 for a single filer living in the US at year end, higher abroad). Missing an FBAR is penalised heavily, so set a reminder for the April deadline.

If you rent the apartment out, the rent is taxable in the US on Schedule E, with depreciation over 30 years for foreign residential property and a foreign tax credit (Form 1116) for the Israeli tax paid, under the US–Israel income tax treaty. Israel offers non-residents a 10% flat tax on gross residential rent or the ordinary progressive schedule with expenses; which one is better depends on the mortgage interest. On sale, both countries tax the gain, again with a credit. If you hold the apartment through an LLC or a trust, the reporting multiplies (Forms 5471, 8858, 3520). Check all of this with a CPA who handles expatriate or cross-border files, and see Shekel Guide for the Israeli side of tax and money.

Timeline from the United States

• Weeks 1–2: set up Choose a lawyer, get a mortgage pre-approval (ishur ekroni, valid about 24 days, renewable) if you need one, open the currency broker account, assemble the source-of-funds file.
• Weeks 2–6: search Agents in Jerusalem, Ra'anana or Netanya are used to live video viewings; many American buyers come once for a 4–5 day viewing trip and do everything else remotely. A professional inspection (₪1,500 to ₪3,000) replaces your own eyes on the plumbing.
• Weeks 6–8: negotiation and checks Avoid signing a zikaron dvarim (binding memorandum) before the lawyer has pulled the nesach Tabu (title extract) and checked mortgages, planning (taba) and municipal debts.
• Weeks 8–10: contract Signed by the lawyer under the POA, 10–20% deposit, caution note (hearat azhara) registered at the Tabu, purchase tax return within 30 days.
• Months 3–6: payments and keys Mortgage drawn down directly to the seller, balance wired on the contract dates, keys, then registration. Off-plan: 1 to 5 years, with usual delays of 6 to 12 months.

Total: 3 to 6 months for a second-hand apartment, bought with one trip or none. The generic step-by-step is on the how to buy page, and the remote mechanics on buying from abroad.

Where Americans buy

Prices per m² are quoted on gross area (walls, balcony, share of common parts), 15 to 20% above the usable area an American would measure. The prices by city page has the full CBS table.

The pitfalls specific to a US buyer

• Wiring before the source-of-funds file is ready. The most common cause of a missed contract date. Every dollar needs a document.
• Leaving the 80% of a 20/80 schedule unhedged. A 7% move on ₪2M is $40,000. Lock at least part of it.
• A generic US POA form. The Tabu will refuse it. The text comes from the Israeli lawyer, in Hebrew.
• Hiding US status from the bank. Banks find the US indicia anyway; an undeclared W-9 is grounds to close the account.
• Forgetting the FBAR. The purchase itself is invisible to the IRS; the account is not. Penalties start at $10,000 per unreported account.
• Signing a zikaron dvarim on a viewing trip. It is binding and triggers purchase tax deadlines. Let the lawyer check title first.
• Assuming a resident mortgage ceiling. 50% is the practical rule for a non-citizen; plan the cash accordingly.

Frequently asked questions

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