Housing Minister Uri Ariel on Tuesday said that he would support a proposal by Finance Minister Yair Lapid to eliminate the value-added tax (VAT) for first-time apartment buyers, providing the discount was given to all home-buyers, including hareidi and Arab Israelis.
Earlier Tuesday, reports said that the discount would be applied to purchases by families who had at least one member serving in the IDF. However, it is not clear if that condition would stand up to examination by the High Court. In the past, National Insurance child allowance payments were given only to families who had a member serving in the IDF, or who had received exemptions from service. Arab and leftist groups sued, and after several decisions by the High Court in the mid-1990s, the government eliminated the requirement.
Ariel said he supported the plan, providing it was inclusive – adding that he himself had made a similar proposal several months ago.
Reports said that Lapid decided to go ahead with the plan after extended discussions with the Finance Ministry's senior professional staff, which opposed it. It is estimated that the tax break will cost the state treasury about 2 billion shekels. Assuming the Cabinet Committee for Housing approves the step, the legal process for turning it into a Knesset bill will probably take six months.
VAT is currently 18%. According to Lapid's plan, families who get the discount would have to hold onto the apartment for at least five years. This measure is intended to prevent couples from buying apartments for the purpose of trading in them.