June marks all-time high for property buying in single month
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June marks all-time high for property buying in single month

Israelis raced to purchase some 16,000 properties ahead of the Finance Ministry tax hike on second homes

Illustration: A housing construction site. (Hadas Parush/Flash 90)
Illustration: A housing construction site. (Hadas Parush/Flash 90)

Ahead of a higher purchase tax on second homes and investment properties which went into effect in June, Israeli investors broke records that month, purchasing 16,000 properties.

According to the head economist at the Finance Ministry, the figure marks a staggering 42 percent rise from the previous month and a 15% increase compared to June last year.

The most popular locations for these investors were Tel Aviv and Netanya, according to the Finance Ministry.

The home purchasing hike was prompted by a tax increase on second homes, as conceived and implemented by Finance Minister Moshe Kahlon

Finance Minister, Moshe Kahlon at the Ministry of Finance in Jerusalem, July 20, 2015. (Yonatan Sindel/Flash90)
Finance Minister, Moshe Kahlon at the Ministry of Finance in Jerusalem, July 20, 2015. (Yonatan Sindel/Flash90)

The Kulanu party leader originally said that his plan to raise the purchase tax on second homes would take effect on July 1, but this set off a frenzy among real estate investors and homebuyers to close as many deals as possible before the deadline.

“There is a huge race of investors toward the purchase of second-hand apartments,” Shai Babad, the director-general of the Finance Ministry wrote on Facebook at the time

By raising taxes on investment properties, the ministry explained, “we will make investment in real estate less attractive and open up thousands of apartments to people who do not yet own an apartment.”

Under the new tax code, investment properties (a real estate property that is not the buyer’s primary place of residence) valued at up to NIS 4.8 million ($1.26 million) would carry an eight percent tax, while all properties above that would be hit with a 10% tax.

Initial figures for July 2015 show a marked decrease in homebuying.

— Judah Ari Gross contributed to this report.

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