{"id":13896,"date":"1997-03-20T18:04:19","date_gmt":"1997-03-20T18:04:19","guid":{"rendered":"https:\/\/jewishaction.com\/?p=13896"},"modified":"2020-07-27T08:24:56","modified_gmt":"2020-07-27T08:24:56","slug":"financial-planning-aliyah","status":"publish","type":"post","link":"https:\/\/jewishaction.com\/jewish-world\/israel\/aliyah\/financial-planning-aliyah\/","title":{"rendered":"Financial Planning for Aliyah"},"content":{"rendered":"

By Aaron L. Heimowitz, Ph.D<\/strong>.<\/p>\n

My experience over the past ten years in helping hundreds of families financially plan for aliyah<\/em> has taught me that when it comes to attending to the myriad “details”\u00a0 — finding a job, a place to live, a school for your children — you really need to turn to the “pros.”\u00a0 Tehilla, the Union for Religious Aliyah, is your best bet.\u00a0 They will help you both professionally and socially.<\/p>\n

Now, more than ever before, successful aliyah<\/em> requires careful financial planning.\u00a0 Today’s aliyah<\/em> landscape is quite different than that of previous years.\u00a0 The Israeli economy is expanding and is increasingly sophisticated.\u00a0 Today, moving to Israel no longer has to mean financial self-sacrifice and a lower standard of living.<\/p>\n

Job opportunities in Israel are especially plentiful to Western-trained and experienced professionals.\u00a0 In most job categories, U.S. and Israeli salaries have not yet reached parity,\u00a0 but the gap is rapidly narrowing.\u00a0 Currently, the average professional salary in the U.S. is $50,000+, while the average Israeli professional salary is $25,000-35,000, with an annual growth rate of over 6%.\u00a0 The average family in Israel is finding it easier than ever before to pay their bills on a timely basis.<\/p>\n

In areas such as private education and medical insurance, the costs in Israel are much lower than those in the United States.\u00a0 Conversely, other expenses, such as car ownership and housing, are higher.\u00a0 After the purchase of a home or apartment, the annual expenses for a family of 5 or 6 can be anywhere between $30,000 and $40,000.\u00a0 Retirees generally need less than families with children, and rental apartments cost less than in the States.\u00a0 The recent U.S.-Israel Tax Treaty specifically exempts<\/em> Social Security benefits received by retirees living in Israel from any tax.<\/p>\n

Real Estate in Israel<\/strong><\/p>\n

In planning aliyah<\/em>, purchasing an affordable home is a major and costly decision.\u00a0 As in all real estate markets, values in Israel will fluctuate.\u00a0 In spite of a recent decline in prices, the overall multi-year trend has consistently been up.<\/p>\n

More and more individuals are buying properties in Israel for future use as well as for investment purposes.\u00a0 Some people buy an apartment and rent it out until they are ready to move in themselves.<\/p>\n

The purchase of property can be financed from savings, investments, retirement funds, mortgages, or a combination of the above.\u00a0 It is important to consult a financial planner who is knowledgeable in this area who can guide you and suggest the best approach for your needs.<\/p>\n

One of the following scenarios may apply to your situation:<\/p>\n

    \n
  1. Funds available from the sale of property in the U.S.<\/strong>. You are fortunate.\u00a0 You lived in your home for years and it appreciated in value.\u00a0 You can avoid taxes from the sale of your home, (hopefully at a profit) if the proceeds are rolled over into an Israeli property within four years.\u00a0 If you are 55 years of age or older, certain tax exemptions apply to the sale of your primary residence.\u00a0 Please consult your accountant for exact details.<\/li>\n<\/ol>\n
      \n
    1. Pre-retirement purchase.<\/strong>\u00a0 You plan to sell your home some time in the future before you retire and want to purchase a new home before making aliyah<\/em>.\u00a0 Your best approach is to investigate a dollar-based mortgage offered by major Israeli bank through their U.S. subsidiaries.\u00a0 The usual down payment is 50% of the appraised property value, with a 10-15 year duration and interest rate based on international index like the European LIBOR rate.\u00a0 This type of mortgage is approved subject to your U.S. income.\u00a0 Depending on the number of years before aliyah<\/em>, your new home in Israel can be waiting for you, free and clear of debt.<\/li>\n<\/ol>\n
        \n
      1. Money tied up in retirement programs.<\/strong>\u00a0 Pension finds, i.e., IRAs and 401K.\u00a0 Depending on your age, these funds can be withdrawn with minimum tax consequences.\u00a0 This is especially true after age 59 1\/2.<\/li>\n<\/ol>\n

        On arrival in Israel, you can negotiate a mortgage with a government-approved mortgage bank.\u00a0 Be aware that the down payment in Israel in normally 50% and mortgages are long-term, 15 to 30 years.\u00a0 25% of the government-approved mortgage is a grant which is forgiven after 15 years for olim<\/em>.\u00a0 This is a substantial benefit, as one only has to repay 75% of the mortgage.\u00a0 Banks may require guarantors for the loan.\u00a0 With the purchase of new construction, payment is usually scheduled over the 24-month construction period.<\/p>\n

        Unconventional Financing<\/strong><\/p>\n

        Investments in the U.S. — i.e., stocks, bonds and mutual funds — can be used as collateral for loans from major financial institutions.\u00a0 50% to 85% of the value of this collateral is usually available at competitive interest rates.\u00a0 Loans can also be arranged against 401K retirement plans.<\/p>\n

        Olim<\/em> are usually full of enthusiasm and hope.\u00a0 A concerted effort at sound financial planning will sustain this enthusiasm and ensure a successful aliyah<\/em>.<\/p>\n

        A financial planner specializing in<\/em> aliyah, Dr. Heimowitz is vice president for investments at Dean Witter, Garden City, New York.\u00a0 <\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

        My experience over the past ten years in helping hundreds of families financially plan for aliyah has taught me that when it comes to attending to the myriad “details” — finding a job, a place to live, a school for your children — you really need to turn to the “pros.” Tehilla, the Union for Religious Aliyah, is your best bet. They will help you both professionally and socially.<\/p>\n","protected":false},"author":718,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"ep_exclude_from_search":false,"_cloudinary_featured_overwrite":false,"footnotes":""},"categories":[126],"tags":[],"class_list":["post-13896","post","type-post","status-publish","format-standard","hentry","category-aliyah","issues-spring-19975757"],"acf":[],"yoast_head":"\nFinancial Planning for Aliyah - Jewish Action<\/title>\n<meta name=\"description\" content=\"My experience over the past ten years in helping hundreds of families financially plan for aliyah has taught me that when it comes to attending to the myriad "details" -- finding a job, a place to live, a school for your children -- you really need to turn to the "pros." Tehilla, the Union for Religious Aliyah, is your best bet. 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