The Knesset has approved in second and third readings the immediate reduction in purchase tax for buyers of investment properties proposed by Minister of Finance Israel Katz. The motion submitted by Katz was approved together with sections of the bill on the economic program to deal with the effects of the coronavirus pandemic. The measure passed the Knesset Finance Committee yesterday despite chairperson Moshe Gafni's objections. Gafni demanded that the purchase tax cut should be dealt with separately.
Having been approved by the Knesset, the temporary order initiated by the previous minister of finance, Moshe Kahlon, raising purchase tax for buyers of investment properties to 8%, has been cancelled, and the level of purchase tax for investors reverts to its former level of 5%.
Katz seeks to bring investors back to the real estate market in Israel, but the move has been criticized as liable to inflate home prices, thereby harming the less well-off.
According to the new purchase tax rates, homebuyers, regardless of the number of homes they own, will pay 5% purchase tax on the first NIS 1,292,280 on the price of a property. 6% between NIS 1,292,280 and NIS 3,876,835 and 7% between NIS 3,876,835 and NIS 5,338,290. From there to NIS 17,794,305 the purchase tax rate will be 8% and above that 10%.
Published by Globes, Israel business news - en.globes.co.il - on July 29, 2020
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