Treasury proposes no VAT for young homebuyers

A couple with at least one child buying their first new apartment will not pay VAT.

Hebrew daily "Yediot Ahronot" reports that the Ministry of Finance proposes that a couple with at least one child buying their first new apartment from a contractor will not pay VAT. In other words, at the current 18% rate of VAT, the couple will receive a discount of about 15.25%.

Under Minister of Finance Yair Lapid's proposal, which top Ministry of Finance officials oppose, within a few months, prices of new home will be reduced by 15.25%. The proposal will later be widened to second-hand homes, because of the reduced demand for such homes by young couples.

The proposal, which of course has not yet undergone legislation procedures, has a number of conditions: at least one of the couple served in the IDF; at least one of the couple is working; the couple resides in Israel; the apartment price will not exceed the average price for each region; and if the apartment is sold within five years of the purchase, the benefit will immediately be repaid.

Sources believe that as the proposal moves forward, purchases of new apartments by young couples and people without their own homes will grind to a complete halt. Contractors may lower prices for new apartments in order to clear inventory.

With this step, Lapid is trying to help the middle class and young couples, and because of the proposal's conditions, Arabs and haredim (ultra-orthodox) will not benefit from it.

Published by Globes [online], Israel business news - www.globes-online.com - on March 18, 2014

© Copyright of Globes Publisher Itonut (1983) Ltd. 2014

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