TEL AVIV - "Yedioth Ahronoth" reports Thursday that Finance Minister Benjamin Netanyahu is planning wide-ranging reforms in the real estate sector.
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Reforms would include a drastic cut in taxes for both builders and homebuyers, a trimming of bureaucracy in the planning committees, and a transfer of property from the Israel Lands Authority to homeowners themselves.
Goal: reform by end of 2005
An additional step that is being considered is making interest paid on mortgages tax deductible. This is the current practice in the U.S.
The Finance Ministry is consolidating the reforms under Netanyahu’s instruction, with the intention to present it to the government and to carry out the reforms before the end of 2005. Several reforms would require legislation.
According to Netanyahu, the goal of the reforms is to bring housing prices down, speed up the building process and bring overseas real estate investors back to Israel.
The main points of reform are:
- Elimination of the bureaucracy in the Planning Committee. Local planning councils would assume increased responsibilities from regional councils. As a result, many decisions (such as building permits) would move to local councils.
- Transfer of land ownership from Israel Lands Authority to private ownership. Currently, the authority controls 93 percent of Israel’s land, containing over a million apartments. Most homeowners sign long-term leases for the land under their homes. The planned reform would transfer ownership to apartment and homeowners themselves.
In the past, Netanyahu has advocated privatizing the authority, and he is expected to move in that direction.
- Lowering of land tax: a significant lowering of taxes for builders, homeowners wanting to expand their properties, and sellers. According to accountant Yair Rabinovitch, who headed the government’s last round of real estate reform, “up to 5 percent of buying an apartment is tax. That means if you haven’t made at least 5 percent from the sale, you have lost money on the sale."
- The committee is also considering incentives to entice Israeli and foreign investors into investing in Israeli real estate.
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