Multi-Asset Taxation

Author:Ms Tsippy Bengi
Profession:Efraim Weinstein Law Offices
 
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On September 15, 2016 the Ministers Comity for legislative amendments approved the bill proposal, according which as of January 2017, a tax will be levied on holders of three or more apartments, at a rate of 1% of the value of the apartment, as from the third apartment, provided however that the tax amount shall not exceed 1,500 NIS per month (18,000 NIS on an annualized basis), and all that subject to additional conditions, which will be determined by regulations. The proposed bill is supposed to be brought for final vote in the Knesset on November this year.

In the explanatory notes to the bill it was asserted that the decision to impose the tax arise from two major considerations: the first, reducing the inequality between populations; and the second, imposing tax will lead to selling apartments (in order to avoid paying the tax) which will increase the supply of apartments and thus reducing the price of apartments.

Background and the purpose of the amendment

On September 15, 2016 the Ministers Comity for legislative amendments approved the bill proposal, according which as of January 2017, a tax will be levied on holders of three or more apartments, at a rate of 1% of the value of the apartment, as from the third apartment, provided however that the tax amount shall not exceed 1,500 NIS per month (18,000 NIS on an annualized basis), and all that subject to additional conditions, which will be determined by regulations. The proposed bill is supposed to be brought for final vote in the Knesset on November this year.

In the explanatory notes1 to the bill it was asserted that the decision to impose tax arise from two major considerations: the first, reducing the inequality between populations; and the second, imposing tax will lead to selling apartments (in order to avoid paying the tax) and increasing the supply of apartments thus reducing the price of apartments.

The sharp rise in prices of apartments as aforementioned increased, according to the explanatory notes, the gaps between the various population strata in Israel. According to data published in the explanatory notes it appears that the rate of household residing in an apartment owned by them among the second decile stands on 54% compared to 80% among the ninth decile. It was further asserted that according to the data taken from the Tax Authority, the average income per household owning three or more apartments amount to 3 times the average income of a household in Israel.

Furthermore, the...

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