As reported in "Globes," the public rushed to buy apartments in June, taking an all-time record of NIS 6.99 billion in mortgages, following the purchase tax hike on real estate investors initiated by Minister of Finance Moshe Kahlon.
Total mortgages in June were 52% more than in June 2014 and 21% more than in May 2015. The previous record of NIS 5.8 billion was in August 2012. That record also resulted from proposed regulatory change in the form of a VAT hike in the following month, which made new apartments more expensive and caused many deals to be brought forward.
Under the new tax rates, investors will pay 8% purchase tax on apartments up to NIS 4.8 million and 10% on apartments worth more than NIS 4.8 million.
The purpose of the tax hike is to curb real estate activity by investors in order to reduce demand, until Kahlon can begin implementing measures aimed at increasing supply in the real estate market. The tax hike was originally slated for early July, but the Ministry of Finance saw how investors were snapping up apartments before the tax increase became effective, and decided to bring it forward, and it went into effect three weeks ago.
Published by Globes [online], Israel business news - www.globes-online.com - on July 12, 2015
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