Housing Minister seeks VAT cut for first-time home buyers
Posted on 15. Jun, 2010 by buyitinisrael in Israel Real Estate
Amid rising Israel property prices, Israeli Housing and Construction Minister Ariel Atias and the Finance Ministry are proposing benefits and incentives aimed at assisting young couples to buy their first home in Israel.
In response to plans proposed by the Israeli Finance Ministry to increase the supply of available housing in order to meet demand and lower prices in the medium to long-term, Ariel Atias said that the measures were welcomed, but not enough to help young couples to buy a first apartment. ”Direct incentives need to be offered for young couples to be able to buy a first apartment,” said Ariel Atias.
Under the proposal suggested by the Housing and Construction Ministry, first Israel home-buyers will be exempted from value-added tax when buying a new home in the periphery. For example, if the average home in the periphery is priced at about NIS 1 million including VAT, young couples could save NIS 138,000 in VAT charges on the purchase price.
In addition, the Housing and Construction Ministry will offer young couples buying a home in the periphery to participate in mortgage refunds at a rate of 20 percent over 20 years. ”The incentives will immediately reduce the burden levied on young couples buying homes and correct the discrimination young couples suffer from,” said Ariel Atias.
Concerns over a housing bubble developing in the Israeli property market as a result of ballooning property prices fueled by a shortage of housing supply and a low interest rate environment, have prompted the Israeli Finance Ministry to present a real estate plan which will be included in state budget for 2011 and 2012.
According to the plan, the supply of housing will be boosted by the approval of 140,000 construction starts for residential projects in 2011 and 2012, that is 70,000 in each year, in order to meet demand and bring down spiralling property prices in particular in high demand areas.
According to the geographic distribution of the plan, land will be released for 10,000 housing starts a year each in the Jerusalem, Northern, and Southern districts; 6,000 housing starts a year in the Tel Aviv District; 25,000 housing starts a year in the Central District; and 9,000 housing starts a year in the Haifa District.
Discussions of the plans for buying Israel homes between Ariel Atias and Minister of Finance Minister Yuval Steinitz will continue over the coming weeks before Israel’s state budget 2011-2012 is submitted to the cabinet and the Knesset.
© Copyright 2010.
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