After the plan was reported in "Globes" several weeks ago, Minister of Finance Moshe Kahlon is still promoting his plan to impose an annual fee of NIS 12,000 per apartment for those owning three or more apartments. The measure is part of his efforts to lower housing prices by cooling off the housing market. The measure is planned as part of the Economic Arrangements bill to be presented to the cabinet together with the state budget in mid-August.
As Ministry of Finance officials see it, the measure is useful in a number of ways: it will lower demand for housing, cause existing investors to sell their housing units, and equally important, the new fee is likely to produce NIS 1 billion in revenue.
According to Ministry of Finance figures, more than 55,000 people own more than three or more housing units, while another 200,000 own two housing units (usually one for residential purposes and one for investment). 38,000 own three housing units, 10,000 four housing units, and 6,000 own five or more housing units.
The measure constitutes a harsh blow for those owning many investment housing units; it will greatly reduce their monthly returns from their housing units.
"Globes" also reported this week that the Ministry of Finance was considering reinstituting the property tax canceled 16 years ago in an attempt to halt the upward march of prices of private land and increase housing starts. Imposing an annual tax 2.5% on the value of private land available for construction is being discussed in internal discussions in the Ministry of Finance and the Israel Tax Authority. The Ministry of Finance believes that this tax would add up to NIS 500 million annually to state tax revenues.
Published by Globes [online], Israel business news - www.globes-online.com - on July 24, 2016
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