A higher purchase tax on second homes and investment properties went into effect Tuesday night, and not at the start of next month as originally planned, Finance Minister Moshe Kahlon announced in a Facebook post.
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. “We want to put an end to that as quickly as possible because there is not an unlimited supply of apartments.”
With that in mind, the ministry put the plan into effect Tuesday night.
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.
Buyers of a NIS 1 million ($266,000) apartment would have paid NIS 50,000 ($13,000) in taxes on Tuesday, and beginning Wednesday morning, they will have to pay NIS 80,000 ($21,000).