Amidst sky-rocketing housing costs, the Finance Ministry published the list of criteria stipulating eligibility for the 0% VAT benefit on the purchase of a first home on Sunday.
The move to effectively cancel VAT on the purchase of real estate was led by Finance Minister Yair Lapid in a bid to address the housing crisis, and its original target audience was young couples buying their first apartment.
However, the proposed bill faced legal troubles because it attempted to condition the benefits on either military or civil service, a condition Attorney General Yehuda Weinstein deemed problematic, claiming it infringed on the basic right to equality.
The compromise reached was to offer the benefit to anyone buying their first piece of property, but also to offer former soldiers or civil service volunteers greater subsidies: Those who served will be exempt of VAT for homes worth maximum NIS 1.6 million ($462,896); while those who didn't will enjoy the benefit only for a purchase of maximum NIS 600,000 ($173,586) – a difference of a million shekel.
The compromise will allow the government to pass the bill without legal dissent, while still rewarding those who served in either military or civilian service. The bill will thus be less relevant to the majority of the Arab public in Israel, as well as the ultra-Orthodox public, who mostly do not serve in the army.
According to the critera published Sunday, those eligable for the benefit are: Married couples, including those wed in civil ceremonies, with at least on child, single parent families with a least one child, couples with no children, but with one partner above the age of 35, singles above the age of 35 and people defined as 75% handicap or those receiving a similar stipends.
To receive the benefits, both members of the couple will have to purchase the home together and prove that they have never owned a home or were partner in a business transaction involving the purchase of a home, even if the deal never went through.
Those who fit the criteria and supply such proof will pay a 0% VAT rate on the purchase; as long as the price does not exceeded the maximum price stipulated by the bill per region, as laid out by the chief Justice Ministry appraiser.