It is no secret that foreign residents serve as a significant factor in the Israeli real estate market. For the most part, these are Jewish individuals residing in various countries—including the United States, France, the United Kingdom, Russia, Ukraine, Canada, Mexico, and beyond. Many foreign nationals purchase apartments in Israel because they have family here and visit frequently, or intend to make Aliyah (immigrate to Israel); others acquire property out of Zionist values or against the backdrop of rising global antisemitism; and some purchase real estate strictly as an investment. In most cases, it is a combination of several reasons.

 SpecialAspects of Real Estate Acquisition in Israel by Foreign Residents

Although foreign residents are highly present players in the Israeli property market, there are several distinct differences and statutory restrictions that make purchasing real estate in Israel far more complex and challenging for non-residents. This begins with logistical and cultural hurdles—it is never simple to purchase a property from a distance, and when you are unfamiliar with the Israeli language and mindset, it becomes even more complicated (and risky).

However, beyond the geographic and cultural aspects, there are additional unique legal dimensions that complicate real estate acquisition for foreign residents in Israel.

Restrictions on Land Ownership for Foreign Residents

Broadly speaking, land ownership in Israel can be divided into two categories: privately owned land and state land managed by the Israel Land Authority (ILA)—which includes land earmarked for development and lands owned by the Jewish National Fund (JNF/KKL). Regarding the first category of privately owned land, there are zero restrictions on foreign residents. Conversely, as a general rule of law, foreign residents are barred from purchasing state-managed land or leasing land owned by the JNF. To put things into perspective, the Israel Land Authority manages approximately 93% of the potential land in Israel, while only about 7% is privately owned. While these figures do not necessarily reflect the ownership status of most residential properties on the market, it remains a major restriction that complicates certain transactions for foreign buyers. It is important to note that this restriction is not entirely insurmountable; it can be bypassed via a special application submitted to the Chair of the Authority (or through alternative administrative procedures for smaller transactions). However, this is by no means a trivial matter, and it is highly recommended to enlist the services of a law firm specializing in representing foreign residents in real estate transactions. This challenge also arises when foreign residents wish to purchase property in communities managed by the Jewish Agency’s Settlement Department; here too, an expert real estate jurist will know how to successfully navigate the restrictions.

Purchase Tax and Land Betterment Tax for Foreign Residents

Another highly significant aspect of acquiring property as a foreign resident relates to Purchase Tax (Mas Rechisha). Due to the ongoing housing shortage and the fact that many properties owned by foreign residents are intended for investment or remain vacant, the state treats every real estate transaction executed by a foreign resident as a luxury or investment purchase, subject to the highest tax bracket. In cases where the buyer is a Returning Resident (Toshav Chozer) or an individual seriously considering Aliyah, regulating their legal status prior to the transaction can substantially reduce the tax burden or even qualify them for a complete tax exemption. It is crucial to note that for returning residents, every case must be evaluated individually based on its specific merits. Here, too, it is highly recommended to consult with a real estate attorney who specializes in non-resident matters.

Furthermore, a foreign resident is not automatically entitled to an exemption from Land Betterment Tax (Mas Shevach—Capital Gains Tax) when selling a property in Israel, even if it is their sole residential property in the country. A non-resident will receive this exemption only if they can prove they do not own any other residential property in their country of domicile. To benefit from this tax relief, the foreign resident must provide official certified documentation from their home country proving that they do not own an additional residential property.

Tabu (Land Registry) Registration and Securing a Mortgage

When a foreign national purchases a property in Israel, the acquisition will heavily rely on a substantial component of equity capital. As a strict rule, commercial banks in Israel do not allow foreign residents to secure a mortgage exceeding 50% of the property's total appraised value. Additionally, the foreign national is required to obtain approval from the Bank of Israel and open a local Israeli bank account. The registration process within the Land Registry (Tabu) can also be considerably more intricate, demanding meticulous administrative attention. This brings us back to the primary challenge we noted—the deep gaps created by physical distance and cultural mindsets. Therefore, the absolute best recommendation for a foreign national wishing to acquire real estate in Israel is to partner with a law firm that not only specializes in civil and real estate law for international clients, but also possesses a high-caliber, service-oriented approach capable of seamlessly bridging these geographic and cultural divides.