Finance Minister Yair Lapid
Motti Kimchi
Lapid: No VAT for young couples buying first home
Despite opposition from Finance Ministry officials, Lapid makes move in bid to overcome housing crisis which has left Israelis 148-montly salaries away from a home.
Finance Minister Yair Lapid has decided to implement a 0% VAT rate for young couples buying their first apartment directly from contractors, in a bid to alleviate the housing crisis plaguing Israel.
According to a source from the Finance Ministry, the professional echelon within the ministry opposed the move, but Lapid decided to push ahead nonetheless after months of lengthy deliberations.
Housing for young couples (Photo: Tomoriko, Yedioth Aharonoth)
The decision was taken as part of a wider attempt to address the national housing crisis which, in addition to rising cost of living expenses and accented by salary devaluation, has left scores of young Israelis struggling to pay rent and has turned the idea of buying a home into a far-fetched dream for most.
According to the most recent data published by the Bank of Israel in February, as a result of the recent 8% rise in housing prices, it would take the average Israeli making average wages some 148 monthly salaries – or 12 years – to buy an average home. In 2008, the number stood at 96 average salaries.
According to the new decision, the Government Appraiser will set a maximum price (per meter) for housing in each area of Israel. Those eligible for the benefit and who buy an apartment for the maximum price, or lower, will pay a 0% value-added tax rate, and will thus enjoy an 18% discount of the purchase price.
The benefit is expected to cost the State some NIS 2 billion.
Those eligible for the benefit are: Couples with one child or less, who do not currently own an apartment, and at least one of the spouses served in the IDF or as part of civil service.
The couples who enjoy the benefit must commit to not selling the apartment within a five-year period. The couples' income will not be taken into account.
The proposal will be brought before the Cabinet for a vote next Monday, but its implementation, which requires legislative changes dictating price caps on housing in certain areas in the country, will take at least another six-months.
