Tax Authority Head Urges Lower Purchase Tax on Investment Apartments
Translated & summarized from Behadrei Haredim by baba
Shai Aharonovich, Director of the Tax Authority, is advocating for a reduction in the purchase tax on investment apartments from the current 8%-10% to 5%-6% due to a real estate market slowdown. He believes this will support the sector and broader tax revenues, as fewer transactions harm income from VAT and income tax. The government will need to decide on the tax rate before the current higher rates expire at the end of 2026.
The story in 6 lines · by baba
- Tax Authority Director Shai Aharonovich recommends lowering purchase tax on investment apartments to 5%-6%.
- Current purchase tax rates for investors are 8% up to NIS 6.055 million and 10% above that.
- Aharonovich cited a slowdown in the real estate market as the reason for the proposed reduction.
- He stated the tax is a tool to control demand and support the real estate sector.
- The current higher tax rates are set to expire at the end of 2026.
- Aharonovich stressed this is a professional recommendation, not a final decision.
The Director of the Tax Authority, Shai Aharonovich, is calling for a review of reducing the purchase tax on investment apartments, citing a slowdown in the real estate market. He stated that the current time is appropriate to revert to lower tax rates, starting at 5% and 6%. Currently, investors purchasing an additional apartment pay an 8% purchase tax on the portion of the value up to NIS 6.055 million and 10% on the amount exceeding this sum. The temporary order establishing these higher rates is set to expire at the end of 2026 unless extended.
Aharonovich explained that, unlike other taxes, the purchase tax on investors serves as a government tool to control demand. He noted that while the tax acted as a brake when demand was high, the current market slowdown necessitates supporting the real estate sector's activity. He further elaborated that a decrease in transactions negatively impacts not only purchase tax revenues but also VAT and income tax, as stalled projects affect a broader range of tax income.
Aharonovich emphasized that his recommendation is a professional stance and not a finalized decision. He indicated that the rate of the purchase tax will be one of the key decisions the government will need to make before the temporary order expires.