In 2021, there was a revival in the real estate market, after a low level of activity in 2017-2019 and a crisis in 2020. Praise tax revenues increased in January-October 2021 by 70% compared to the same period in 2019 and reached NIS 6.3 billion, and tax revenues Purchases increased by a similar rate of 72% and reached NIS 9.8 billion. In October 2021 alone, there was a sharp jump in praise tax revenues, at a rate of 248% and 198% in purchase tax revenues. Attribute this increase to the market response to the expectation of an increase in purchase tax for investors.
In the segmentation of purchase tax by type of property, it can be seen that most of the income from purchase tax is collected from the purchase of apartments, 57% in 2020. Of these, 32% are from investment apartments, 14% from single apartment purchases and 11% from “waiting” apartments. Another significant part of the purchase tax revenue stems from the purchase of land, which in 2020 stood at 30%. Tax revenues from the purchase of buildings constitute 10% and the remaining 3% derives from activities in a real estate association.
Following the reduction in purchase tax for investors on July 29, 2020, January-July 2021, the average monthly purchase tax on an investment apartment increased by 47% compared to the corresponding period in 2020, as a result of a 120% increase in transactions and a 10% investment in apartment prices.
In the segmentation of the demand for investment dwellings by regions in 2020, a change was observed compared with data for 2019. In areas with a relatively low price level – such as Haifa, Beersheba, Tiberias and Nazareth – there was a significant increase in the purchase of dwellings by investors, 20% -30%. The highest amount of investment apartments purchased in Haifa was recorded in 2020 – 2,943. In Tel Aviv, where there were the most purchases by investors in 2019, the amount remained almost unchanged.
The main source for collecting praise tax is the sale of land intended for housing – NIS 3.1 billion in 2020, which constitutes 52% of the total collection. The sale of a commercial building constitutes another 23%, NIS 1.4 billion in 2020. About 17% of the praise tax is collected from the sale of residential apartments.
In January-September 2021, the effective appreciation tax rate on investment apartments reached 12%.
On July 29, 2020, the temporary order of purchase tax ended at rates of 8% -10% on the purchase of investment apartments (apartments that are not units) and the tax rate returned to its previous rates according to the 5% -10% steps. It has just been proposed to refund the high tax rate. On 11/28/21, the purchase tax brackets were raised again for the purchase of an apartment that is not a single apartment. The tax rates are: for the portion of the purchase value up to 5,348,565 – 8%, for the portion of the value above the said amount – 10%.
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