There is no doubt that it is much easier for us to put our trust in tangible things that are on the ground, especially when it comes to one of the more significant investments we will make in our lives, and therefore it is clear that feeling of discomfort and apprehension that arises in the stomach when we are debating whether to buy an apartment 'on paper'. But the truth is that if we allow these feelings to lead us, we may give up on a very profitable deal, since buying an apartment on paper can save you hundreds of thousands of shekels. How? Note:
Because of the increase in value
The earlier you purchase your apartment, the less you will pay for it, because as construction progresses and turns from diagrams and simulations into reality on the ground, its value increases. Ultimately, when the construction of your apartment is completed, its value can increase by ten percent to thirty percent. For example, an apartment you purchased for one million shekels can be sold for a profit of three hundred thousand shekels before anyone even moves in.
Because of the choices
Many projects offer customers a variety of apartments of different sizes and with different options, and some are in higher demand than others. For example, you may be interested in a 4.5-room apartment, but when you come to purchase the apartment, you may find that all the 4.5-room apartments have already been sold and you have to choose between a 4-room apartment that may be too small or a 5-room apartment that will require you to spend money you did not plan on. However, the earlier you purchase the apartment, the larger the stock of apartments available for purchase, so you will not have to compromise and you will be able to purchase the perfect apartment for you.
Because of the payment method
When we buy an existing apartment, we will pay the seller or contractor the entire value of the apartment, but when we purchase an apartment on paper, the payment method will usually be in accordance with the stages of construction. This payment method opens up a new opportunity for us - if we said that the value of the apartment never stops increasing, this means that if we sell our apartment before its construction is completed, we will actually invest only part of the capital for the completed construction stages, but on the other hand, we will earn the entire increase in the value of the apartment.
Because of the tax savings
In Israel, there is a law that states that if you own more than one apartment and want to sell one of them, you are required to pay a capital gains tax derived from the profit you received from the sale of the apartment, which is 25%. For example, if you purchased an apartment for a million shekels and sold it for a million and a half, your profit is half a million shekels, and therefore you will be required to pay the state 125,000 shekels.
But be careful – if you sell the apartment within 18 months of purchasing the new apartment, you can receive a tax exemption and you won’t have to part with this gastronomic sum. How does this relate to purchasing an apartment on paper? This 18-month period only begins from the moment you move into the apartment, meaning that if you bought an apartment on paper and have two years until its construction is completed, you will gain valuable time to sell the first apartment, time that will provide you with more flexibility and allow you to search for buyers at your leisure.
Because of the savings on renovations
Even when we buy a brand new apartment, there's a pretty good chance we'll want to move a few electrical outlets, make various adjustments to the lighting, and even move walls inside the house. But all of these changes cost a lot of money, and if that weren't enough, they could even delay our move-in for weeks.
On the other hand, changing an electrical point in the house plan is a completely different story, meaning that when you buy an apartment on paper, or even an apartment in a building that is under construction and the internal division of the apartment is not yet completed, it will be much easier for you to request all the changes and actually save tens of thousands of shekels if not more.
It's only natural to be afraid of making a purchase worth millions of shekels that we won't receive in return for in a few years, but when you look at the big picture and the economic benefits of purchasing an apartment on paper, there's no doubt that this is an opportunity not to be missed.
