Knesset Finance Committee chairman MK Moshe Gafni (United Torah Judaism) today told the government to raise the purchase tax threshold on a first home to NIS 1.6 million from the current NIS 1,139,000. He cited the fact that most apartments in high demand areas cost more than NIS 1.2 million. The statement came after the committee discussed the land tax bill, which seeks to increase the supply of homes for sales.
Gafni also told government officials to grant guarantees to sellers of land for residential construction, so that they will obtain the reduction in the betterment tax set out in the proposed bill, and will not have to initially meet the eligibility conditions for the tax break, and only afterwards learn if they obtained it or not.
Finance Committee members disagreed with the Ministry of Finance officials about the tax brackets for homes for investment. The committee members want to change the brackets to 3.5% for homes worth NIS 2.6-2.5 million and 5% for homes worth more than NIS 2.5 million.
Ministry of Finance housing coordinator Reuven Kogan said that widening the purchase tax brackets and raising the threshold would affect tax revenues. He said that the median home price was NIS 865,000, so there was no genuine need to raise the tax threshold. He said that, in 2010, 67% of buyers of a first home were exempt from the purchase tax, and that if the threshold were raised to NIS 1.4 million, the exemption would apply to 90% of buyers of first homes.
Published by Globes [online], Israel business news - www.globes-online.com - on February 1, 2011
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