News for home buyers: Paying about 2,500 NIS on average less tax this year • One of the implications: Those who buy a more expensive apartment will also enjoy the more spacious first class
New construction in Tel Aviv // Photo: Moshe Shay
Due to the reduction in the purchase tax, this year we paid an average of NIS 2,520 less on the purchase of a residential apartment. That is, the more expensive the dwelling is, the greater the purchase tax savings.
This follows an update of the 2020 tax bracket, in line with the rise of the housing price index by 2.8% in 2019.
The Tax Authority released the new purchase tax stairs yesterday, following the rise of the construction index by 2.8% in 2019. The purchase tax stairs are linked to the housing price index, and not to the general index, which rose by only 0.6%, nor to the housing component of the general index, which rose only by 1.9%.
The practical implication is that first-time home buyers will enjoy a higher discount, as the 2.8% update on home prices means that if a 2019 apartment is not taxed up to 1,696,750, no-up to 1,744,505 home tax exemption will be paid in the year. 2020 will grow in another NIS 47,755. Those who purchase a more expensive apartment will benefit from both the more spacious first level and the extra spacing of the billing steps.
If in 2019 tax was paid at the rate of 8% on the value of up to NIS 5,194,225 from the price of the apartment, then tax will be paid at this rate on the value of up to NIS 5,340,425. The share of the value exceeds NIS 5,194,225 in 2019 and exceeds NIS 5,340,425 in 2020 - the tax rate is 10%.
The new tax bracket
According to the new stairs, no tax will be paid at all, up to NIS 1,744,505. On a par value exceeding NIS 1,744,505 to NIS 2,069,205 - 3.5%. On a par value exceeding NIS 2,069,205 to NIS 5,338,290 - 5%. For a share of the value exceeding NIS 5,338,290 and up to NIS 17,794,305 - 8%, and for those who purchase an apartment whose price exceeds NIS 17,794,305 - 10%.
