Minister of Finance Israel Katz is expected to announce that the purchase tax on buying a home in Israel for those already owning one home will be cut from a rate of 8% (and even higher for very expensive homes) to 5%. The tax cut, which was anyway expected to come into effect in five months, will be implemented as part of the state budget, sources inform "Globes."
The higher purchase tax on the purchase of a second home was introduced by former Minister of Finance Moshe Kahlon in an attempt to drive investors out of the market and thus lower housing prices for first-time buyers, but the measure did not halt the price rises.
Moreover, Kahlon's measure would seem to have cost the state valuable tax revenues. Between 2014 and 2019, overall tax revenues from housing purchases rose by 70% while revenues from investors rose by only 25%. An estimated NIS 3 billion was lost in state revenues.
The government is eager to boost state revenues from housing purchases by investors in order to help fund the expensive rescue package for those affected economically by the coronavirus pandemic. Minister of Construction and Housing Yaakov Litzman wants investors to buy homes in outlying regions. At the same time, the government will halt subsidies for young couples by ending the Buyer Fixed Price program.
Published by Globes, Israel business news - en.globes.co.il - on July 12, 2020
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