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Treasury plans to raise taxes on homes bought for investment

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By Amiran Barkat

and Drior Marmor 

Globes

The Finance Ministry is recommending to Finance Minister-designate Moshe Kahlon a 20-percent tax on purchases of housing for investment purposes. Kahalon has already declared he intends to introduce a steep tax hike within the framework of the coalition agreement his Kulanu partyy signed on Wednesday with the Likud. 

The agreement does not specify the rate of the new tax, which applies to purchases of apartments by people who do not intend to live in them. Kahlon spoke of raising the purchase tax to 25%, but he would be satisfied with 20%, people familiar with the matter told Globes.

An internal probe by the Finance ministry Budget Department showed that a 20% tax would e optimal for state tax revenues, while a higher rate would reduce tax revenues due to a sharp drop in the number of deals.

The measure is quite dramatic, amounting to hundreds of thousands of shekels for an average apartment. The current tax on housing for nonresidential purposes is graduated : 5% on the first bracket and up to 10% on the fifth and highest bracket of NIS 15 million or more. A simulation conducted for an apartment costing NI 2m. shows that the recommendation quadruples the purchase tax on an investor from NIS  108,000 at present to NIS 400,000, while a person buying the same apartment for residential purposes would pay NIS 20,000.

This tax hike will cause an earthquake in the housing market, a quarter of which is composed of those purchasing housing for investment purposes, according to the most conservative estimates. 

Author: Ida Real Estate

I have dealt with people starting from my teen years whether it was a junior counselor position, volunteering in community centers for the elderly, working as a secretary and as a real estate agent. Dealing with the public is a learning experience and challenging. Someone once told me that a person can learn from every being they meet whether it be a child or a stranger they met for 2 minutes. This I hold true. I have met so many people and have learned a lot and keep learning. My father who ran his own business made it a point to provide good service to all his customers no matter how small the customer. I hope to offer quality, honesty, and result in happy customers whether they are sellers, buyers, or renters.

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