The Knesset Finance Committee has approved regulations for the tax on people owning three or more residences, after introducing changes.

The changes provide that the grant for someone who owns three or more residences and sells one of them will rise to up to NIS 85,000 instead of NIS 75,000. The grant is available to sellers during the first ten months of 2017 only, and only for up to three residences sold. The grant offsets betterment tax, and if the tax payable is less than NIS 85,000, it will be limited to the actual amount of tax.

A further change is that the period for which someone who sells an investment home and receives a grant will be required not to buy another residence will be four years instead of five. It was also decided that the seller of a residence the value of which is lower than the minimum that would bring it within the scope of the tax will be entitled to a grant of 50% of the betterment tax to which he is liable, up to a maximum of NIS 15,000.

The committee also decided to cancel section 5b of the regulations, reported by "Globes" yesterday, according to which if an investor sells a residence and receives a grant, but the person who bought the residence fails to sell their other residence within eighteen months, then the seller will obliged to repay the grant. The section was removed following widespread criticism pointing out the inability of the seller to control the behavior of the buyer. Finance Committee chairman Moshe Gafni said, "The Ministry of Finance can amend the section through the Ministry of Justice or it can propose a legislative amendment on the matter that the Finance Committee can support."

Opposition Knesset members were absent from the discussion. Yesterday they attempted to postpone the committee session on the grounds that they had not had enough time to study the material, but Knesset legal counsel Adv. Eyal Yinon decided that despite the short time interval there was no legal impediment to holding the session on the scheduled date.

Gafni criticized the Ministry of Finance officials present over the matter. "We are not the Finance Ministry's machine gun and the Knesset is not a rubber stamp. I shall change these things in the future. It sometimes takes you two years to approve regulations, and you want things to be different here. It won't happen."

Deputy budget director Eran Nitzan said in response to Gafni, "The discussion is urgent because of the fact that the law is already in force and we ask the committee to set the rules for the grant. No-one was happy that the law came into force in the absence of approved regulations."

Published by Globes [online], Israel business news - www.globes-online.com - on January 5, 2017

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