Earlier next week, Housing Construction Minister Ze’ev Elkin, Finance Minister Avigdor Lieberman, and Interior Minister Ayelet Shaked will announce an increase in investment housing purchase taxes. The rates were probably the same as those imposed by Moshe Kahlon as Minister of Finance and were changed by his successor, Israel Katz. Therefore, for investment buyers, the tax rate starts at 8% instead of the tax rate starting at 5% of the home price. The bill is expected to pass swiftly to prevent a sudden surge in investment purchases from defeating new rates and leading to sharp rises in prices. In Carlon’s day, this measure was introduced by a five-year provisional ordinance.
This move is not a big surprise. Two months ago, the Treasury Chief Economist made it clear that it was investment buyers who pushed home prices up, with first-time home buyers paying more. Relocation critics argue, with some justice, that the supply of rental apartments will fall, and that this measure will hurt those who seek to rent an apartment.
The numbers show that investment buyers do not need an official government announcement. Over the past few months, the number of investors buying homes has grown exponentially. According to Bank of Israel figures, the number of investment buyers who bought homes on mortgages peaked in 10 years in August.
Further measures are planned
Raising the purchase tax rate is one of many measures that the minister is expected to offer to the government to deal with the serious housing crisis. So far this year, average apartment prices have risen 9.2% and are expected to rise by double digits by the end of the year. Among the additional moves on the agenda are measures to reduce short-term rentals (via Airbnb, etc.): Anyone who advertises an apartment for a stay of 100 nights or more per year, tourism tax, That is, you will pay double taxation of rental income. The idea is to strengthen the Israeli hotel industry and free up apartments in central Israel and Jerusalem for permanent housing rather than for tourists to use.
Another measure under consideration is to provide incentives for suburban urban renewal. The Ministry of Housing Construction strives to prioritize such projects in northern Israel because of its aging buildings and its vulnerability to missile fires. Contractors are given cash incentives for renewal projects by the Ministry of Defense, Treasury, and Ministry of Housing Construction neighborhood rehabilitation programs. Another possibility is to provide developers with urban redevelopment projects on additional land in the north in the heart of the country.
Israeli Business News, Published by Gloves- en.globes.co.il -October 28, 2021.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2021.
The government does not see hiking taxes on investment homebuyers
https://en.globes.co.il/en/article-1001389090#utm_source=RSS The government does not see hiking taxes on investment homebuyers