The Tax Authority publishes the data on the revenues that result from taxation on real estate (land and apartments). The report refers to revenues in the first ten months of 2022 – these amounted to NIS 21.7 billion, while revenues from taxation on real estate in the whole of 2021 amounted to NIS 20.8 billion.
The increase is due to a real increase of 41% in income from purchase tax and 22% in income from appreciation tax in the period January – October 2022 compared to January – October 2021. But there seems to be a moderation in real estate purchases since most of the income came from the beginning of the year, while in the months of September – October 2022 the income from purchase tax decreased by 27% and appreciation tax by 7% compared to the corresponding period 2021.
After the increase in the purchase tax during the year, revenues from the purchase tax on investment apartments decreased by a nominal rate of 24% as a result of a 35% decrease in transactions, but as mentioned this decrease was halted in 2022. In January – June 2022, the average monthly collection of purchase tax on investment apartments amounted to approximately 290 million shekels, with 1,695 purchases of investment apartments on average per month, while in the corresponding period in 2021, 382 million shekels were collected on average per month with an average of 2,610 transactions per month.
The bulk of the income from purchase tax in 2021 will be collected from the purchase of apartments, 52% of the total income, of which 31% is from investment apartments, 14% from the purchase of a single apartment, and 7% from apartments in “handover” (housing improvements). Another significant part of purchase tax revenue comes from the purchase of land – 33% in 2021. Tax revenue from the purchase of buildings constitutes 12% of all purchase tax revenue and the remaining 3% comes from real estate association activities.
Distribution of income by regions, it can be seen according to the report that the highest collection is in demand areas where the price level is particularly high. The highest revenues from purchase and appreciation tax are in the Tel Aviv region (NIS 3.8 billion from purchase tax and NIS 2.9 billion from appreciation tax), Netanya, Merzaz and Rehovot (2.5, 2.3 and 2.1 billion respectively from purchase tax and 2.1, 1.4 and 1.4 billion NIS, respectively, from appreciation tax). When these four areas together concentrate about two thirds of the collection.
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In 2021 there was high activity in the real estate market, both in residential apartments and in business real estate. This is after the corona crisis in 2020 and after a relative moderation in the pace of activity in the industry in 2017-2019. Activity reached its peak in November 2021, before the increase in the purchase tax on investment apartments, and since then the volume of transactions has decreased slightly but prices have remained the same and even increased in some areas.
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