Wednesday, 24 June 2015

Will Young Couples (and Others Without Their Own Homes) Ever Be Able to Own Their Own Homes in Israel? (Guest Post)

F.N.B - a friend on Facebook had the following to share regarding a new law that has just gone into effect in Israel. The law stipulates an increase in the purchase tax for real estate investors to 8%. Here's what F.N.B had to say:

Real estate purchase taxes for investors were supposed to go up to 8-10% on July 1st - but then suddenly two days ago the treasury dept changed the effective date to today causing havoc in the real estate market.

This whole tax increase thing is such BS because many of the apartments the treasury is trying to save for young couples are still not affordable to young couples making 10-15,000 ILS a month between two people.

If the goal is to help young people afford an apt then isolate apartments that suit younger people and offer incentives like 0% VAT on new projects and 0% Purchase Tax on first homes up to a reasonable threshold like 2,000,000 Shekel - better yet the government can release land for development at discounted prices and regulate the price a developer can charge on those specific projects.

Real estate is huge business for the government - 18% VAT on every new apartment sold plus 18% VAT on the cost of materials and services to build the buildings and on consulting fees like attorneys, agents, mortgages etc - plus Purchase Taxes and who pays the most in Purchase Taxes? INVESTORS - I highly doubt they think this will solve the housing crisis as much as they're hoping to gain higher tax revenues from investors.

At the end of the day - this change hurts everyone - especially young couples who can't afford to buy an apt on a 10,000-15,000 ILS a month household income - it's not enough to pay for life and save money for a 30% down payment plus expenses - and now that they still can't buy apartments, investors will pay more for these apartments and charge higher rents or not buy at all causing a rental crisis.

The winner in this game is the tax collector because once the dust settles, investors will buy and the taxes will be paid and rents will go up and nothing will change for the young people desperately trying to make ends meet.

The full article regarding the new tax can be read here: Treasury seeks instant investment property tax hike.

Welcoming Olim: Indeed, the housing crisis has become impossible to deal with for those earning minimum wage amounts, coming to Israel with no money at all, and for those just trying to get any start of life in Israel

Taxes areon the rise. Service providers (for real estate) are on the rise. Those selling are asking for more and are being able to invest further, however those who cannot make the start are left stranded. When will changes be made to assist those who have committed themselves to living in Israel and trying to make a start with limited funds? Are we encouraging others to come to Israel for the sake of convenience (everyone is doing it - you'll be okay - come on!) or are we serious enough to assist those in need of proper absorption? Where will help come from if not from those who have the ability to make real positive changes?

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