The ministerial housing committee on Monday approved a bill which would grant a tax exemption to Israelis buying their first apartment.
Starting in September 2014, those who meet the criteria will be entitled to purchase their new homes without paying the 18 percent value-added tax on the apartment, a move which would significantly reduce housing costs for young Israelis.
The bill will now head to the Knesset floor for a first reading.
Finance Minister Yair Lapid said in a statement on Monday that “reducing apartment prices is a national mission, today we passed another stage in the legislative process which is part of a comprehensive plan that the housing cabinet is leading these days to reduce the price of housing in Israel.”
He said that the zero tax on new apartments move would help middle-class young couples purchase homes in the short term.
Buyers who served in the military or in civil service or who are disabled, qualify for the tax break for apartments under NIS 1.6 million. Those who do not meet those qualifications are entitled to the tax break for apartments under NIS 950,000. Buyers must also be parents to at least one child in their custody and over the age of 35. The couple must also not have owned an apartment since 1995.
The Tax Authority is set to publish a digital questionnaire on its website for interested parties to determine whether they qualify for the tax break.
In March, when the bill passed in a cabinet committee, the Finance Ministry noted that buyers will not be allowed to sell an apartment that receives the tax break within five years of the purchase, a restriction aimed at curbing speculation on the cheaper housing.