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29/09/2016

Aliyah Preparation: Basic Information on Currency Regulations

מאגר מידע » Aliyah-עלייה » Aliyah Preparation
 
כותב המאמר: Hagshama Department

The objective of this page is to provide some very basic information on the different foreign currency regulations which may be relevant to non-residents of Israel who wish to purchase or sell real estate in Israel. The information on this page is not intended as legal or professional advice and obviously should not be relied upon as such. Prospective purchasers and sellers must obtain definitive and specific legal and professional advice from qualified Israeli legal counsel. 


Purchasing Real Property:

 

The prices of Israeli real estate are generally quoted in US Dollars. However, payment must usually be made in Israeli currency (the Israeli Shekel). Foreign residents purchasing real property in Israel may generally freely convert foreign currency into Israeli Shekels for this purpose.


Selling Real Property:


In general, it is forbidden to convert Israeli currency to foreign currency or to remove foreign currency from Israel. However, under certain circumstances a foreign resident is entitled to freely convert to foreign currency and transfer out of Israel all amounts received in Israeli currency from the sale by the foreign resident of real property which was previously purchased by the foreign resident in foreign currency.


In order to be eligible for the above exemption, the foreign resident should comply with the following procedures when purchasing the real property:

  • Prior to the purchase of the real property, the foreign resident should establish a Foreign Resident Account with an Israeli bank and deposit in this account an amount in foreign currency equal to the purchase price of the real property.
  • The bank should be instructed to convert the foreign currency to Israeli currency and to execute payment to the seller of the real property in the Israeli currency proceeds of the conversion.


Alternatively, the following procedure may be used:

  • Foreign currency in an amount equal to the purchase price of the real property may be deposited directly in the seller’s bank account at an Israeli bank. If the seller’s account is not a foreign currency account, the deposit should be accompanied by an instruction to convert the funds to Israeli currency upon deposit.
  • The bank receiving the foreign currency deposit and converting the funds to Israeli currency should be advised that the funds are being used to purchase real property and instructed to note that the purchase is being made in foreign currency.


Upon the sale of the real property by the foreign resident, the proceeds from the sale should be deposited in the seller’s Foreign Resident Account. The bank should be advised that the funds represent the proceeds of the sale of real property originally purchased by the foreign resident in foreign currency. Upon presentation of evidence that the property was originally purchased with foreign currency, the bank will honor an instruction to convert the Israeli funds to foreign currency. The foreign currency proceeds from this conversion may then be freely transferred abroad to the order of the foreign resident.


In connection with the deposit and conversion of the proceeds of the sale, the foreign resident must present the bank with a copy of the real property sales agreement and either a Deed of Sale certified by the Land Registry or such other proof of the real property sales transaction as meet the requirements of the foreign currency control regulations.


It should be noted that the foreign currency control regulations also permit a foreign resident to freely convert to foreign currency and transfer out of Israel the proceeds from the sale of real property held by a foreign resident for at least seven (7) years, regardless of the currency used to purchase the real property.


The foreign currency control regulations also permit a foreign resident to freely convert and transfer abroad all amounts received from the rental of real property (subject to payment of income tax), provided that the purchase price for the real property was paid by the foreign resident through an Israeli bank, whether or not the purchase was made in foreign currency.

 
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