Tax authority: encouraging the sale of land for residential construction collecting less tax from buyer

The tax authority has issued a memorandum of law for public comments that includes seven amendments to the Real Estate Tax Law - praise tax and purchase tax - aimed at encouraging the sale of land for residential construction, collecting less tax from buyers of cheap first apartments and correcting various tax distortions.

Objectives of the law According to the explanations of the Treasury: Encouraging the sale of residential apartments in the near term, increasing supply and lowering apartment prices. The measures are expected to increase state tax revenues. The memorandum is open for public comment until February 3rd.
The first step is to update the purchase tax brackets in the same wording that the Knesset has already approved in a preliminary reading as part of a bill signed by MKs from the coalition and the opposition. According to the new steps, the purchase tax rates applicable to the purchaser of a single residential apartment will change as follows:
* Those who purchase for the part of the value up to NIS 1,930,000 will no longer be paid purchase tax at all.
* For the part of the value that exceeds this amount and up to NIS 2,330,000, tax will be paid at a rate of 3.5%
* For the part of the value that exceeds NIS 2,330,000 and up to NIS 3,100,000 - 5%
* For the part of the value that exceeds 3,100,000 and up to NIS 5,300,000 - 8%.
* For the part of the value that exceeds NIS 5,300,000 - 10%.
The new law set the tax bracket for buyers of a second apartment at 8% in apartments purchased at a price of up to NIS 5,348,565 and 10% above this price. Until the law enters into force, the tax bracket for buyers of a second apartment starts at 5% for apartments priced up to NIS 1,284,770 per apartment, 6% up to NIS 3,884,294, 7% up to NIS 5,348,565, 8% up to NIS 17,828,555 and above a tax bracket of 10%.