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Aug 4, 2016
Proposed Law: new tax on 3rd apartment
MK Uri Maklev is against a proposal for a new tax on people who own 3 (or more) apartments. Maklev says he opposes it because it will mostly hurt avreichim.
I saw some notice about this and it made me go "huh?". How would such a tax hurt avreichim? Are avreichim commonly real estate moguls?
A bit of research led me to understand better what he is opposing and why. As part of a new tax plan being proposed by Finance Minister Moshe Kachlon, one aspect of it has a new tax on people who own 3 apartments.
Supposedly there are about 50,000 such people in Israel.
The owner will be given an opportunity to select which of the apartments should be considered his third. If he does not select one, the State will select a default on his behalf, supposedly the cheapest of the 3 apartments.
The finance Ministry officials also are promoting this as a boon to the housing crisis. they say that to avoid this tax people will sell those third or fourth apartments, thus creating more available supply in the housing market. Ergo, housing prices will come down a bit.
So, how does this hurt avreichim?
According to Maklev, this will more likely cause rental prices to go up, which will essentially hurt avreichim. the owners will absorb the taxes and raise the rental fees to cover them.
In addition, it seems that avreichim do invest in real estate, according to Maklev. Maklev says they choose to invest in real estate and get better and/or safer returns than regular investments. Many families choose to buy an additional apartment with their money that will go up in value.
Maklev says if the Finance Ministry wants to bring in more tax money they should do it by increasing the supply and build more houses rather than take the small money from its citizens who just want to marry off their kids respectably.
source: haredim10 and Kooker
I wonder if Maklev can produce actual numbers on how many of the 50k people owning 3 apartments or more in Israel are Haredim. I am curious if they are a majority, a minority, a significant minority, or if he is just making assumptions...
I saw some notice about this and it made me go "huh?". How would such a tax hurt avreichim? Are avreichim commonly real estate moguls?
A bit of research led me to understand better what he is opposing and why. As part of a new tax plan being proposed by Finance Minister Moshe Kachlon, one aspect of it has a new tax on people who own 3 apartments.
Supposedly there are about 50,000 such people in Israel.
The owner will be given an opportunity to select which of the apartments should be considered his third. If he does not select one, the State will select a default on his behalf, supposedly the cheapest of the 3 apartments.
The finance Ministry officials also are promoting this as a boon to the housing crisis. they say that to avoid this tax people will sell those third or fourth apartments, thus creating more available supply in the housing market. Ergo, housing prices will come down a bit.
So, how does this hurt avreichim?
According to Maklev, this will more likely cause rental prices to go up, which will essentially hurt avreichim. the owners will absorb the taxes and raise the rental fees to cover them.
In addition, it seems that avreichim do invest in real estate, according to Maklev. Maklev says they choose to invest in real estate and get better and/or safer returns than regular investments. Many families choose to buy an additional apartment with their money that will go up in value.
Maklev says if the Finance Ministry wants to bring in more tax money they should do it by increasing the supply and build more houses rather than take the small money from its citizens who just want to marry off their kids respectably.
source: haredim10 and Kooker
I wonder if Maklev can produce actual numbers on how many of the 50k people owning 3 apartments or more in Israel are Haredim. I am curious if they are a majority, a minority, a significant minority, or if he is just making assumptions...
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Labels:
housing crisis,
proposed law,
taxes
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More importantly, apartments are bought for their children. Usually on the parents name because the kids have no established credit history
ReplyDeleteEven if there are not a lot of avreichim with three apartments, this is another stupid populist suggestion (like Lapid's VAT exemption) which won't solve the basic problem, that there are not enough apartments being built.
ReplyDeleteThere seems to be a philosophy that the only way to increase affordable housing is to make buying apartments cheaper. The problem is those in most need of affordable housing are those who can't afford to buy an apartment.
ReplyDeleteIf the Government would allowed the development of a the market for rental apartment buildings, it would go a long way to not only increase supply but to finally deliver some stability to the renters market.
I heard someone from kulanu on the radio the other day and he was talking about how they have been working on a plan for subsidized rentals similar to the rental units in the USA and that they are in touch with investors and kablanim about it. If the plan comes together he said it will bring down the cost of rentals and wuold provide long term rentals to people so they dont have to move frequently.
ReplyDeleteIf they are going to tax owners of more than two apartments, than these rental subsidies are going to be targeted to those who own two apartments or foreign ownership unless the subsidy goes straight to the tenant. It doesn't really address the issue of crazy landlords.
ReplyDeleteAlthough it might create the situation similar to other jurisdictions where tenants are locked into an apartment not well suited for them but they can't move because it does not make sense to give up the subsidy.
There are also families such as ours who have one successful side which has had to provide housing for others. We have one apartment where we raised our family. Then had to buy another apartment when my mother-in-law ran out of money in retirement. And after paying off our first apartment we bought an apartment to house my disabled brother-in-law. I guess we are just bad people for helping out the rest of our family.
ReplyDeletegood for you, but who said anything about being bad people? the FM wants to impose a tax, he didnt say people who own multiple properties are bad. I guess you can get around ti by putting the properties in other people's names, if that is worth avoiding the tax.
DeletePeople who own apartments don't want the government to build more apartments. That would lower the value of existing apartments. Or more likely, lower the rate of growth of apartment values. Subsidies, etc don't help, except make people think the government wants to help them, not necessarily in a good way.
ReplyDeleteThe only solution is to build more, and loosen restrictions on building, and not announcing the same new projects year after year.