Controversial Tax on Owners of Three or More Homes Struck Down

Minister’s Kahlon’s plan to penalize primarily investors, with a special tax for owning three or more dwellings was squelched by the Israel Supreme Court.

There is definitely a shortage of affordable housing in Israel, especially for young, growing families. It is particularly acute in Israel’s center, less so here in the north or in the south. Minister Kahlon sought to address this issue by assessing a punitive tax on investors designed to open up the market and increase rental home stock in Israel. But, it was pretty much universally agreed that this approach would fail to reach its objective. During the time the proposed law was pending, there was a noticeable drop in the number of real estate purchases by foreigners.

It is not the end of the story. The Israel Supreme Court suggested that the Knesset re-examine the approach and come up with something better. Minister Kahlon remains dedicated to his cause so we can expect him to offer this plan again in the new session, once everyone returns from summer vacation.

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Buying Property in Israel is Getting to be More Expensive

While you can still find good deals on affordable homes in northern Israel, buying property in Israel is not as cheap as it used to be. Even though fewer contracts were closed in the past quarter, prices are not coming down. In fact, sellers are raising their prices. The main problem is the lack of housing stock. And, the lack of private land available for sale upon which to build. Investor purchases have slowed, but this has nothing to do with the price of homes and everything to do with the new tax structure.

Our advice is that you lock in your home in Israel now, because the prices are not going to come down, and you will have an investment that will increase in value. Even if you never live in the home and sell it, you will make some money. Best is to buy now and come when you are ready. Or better yet…come now!

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Want to Buy Property in Safed, Israel?

old-city-safedIf you are holding out for a new apartment in Safed, there is some great news for you.

Seventy-five acres were purchased recently by two frum developers at the top of the Canaan neighborhood in Tzfat. Plans are to build 2,000 apartments for the frum community. Safed, or Tzfat, is already home to thousands of chareidim, who enjoy not on the great mystical and holy atmosphere of this beautiful city in the mountains of northern Israel, but also the great home prices. Whereas across Israel, the price of apartments has been leaping upward, in Safed, they remain affordable.

As with all new projects, quite a bit more work needs to be done with the city planning and zoning offices, but the good news is that the ink is dry and the process is moving forward. Stay in touch with us to be kept up to date, and to learn about making a reservation once the project arrives at that point.

Check out our Tzfat page for a sample of properties available in Safed, but keep in mind, that many properties are not listed here. We are expert property finders. Just be in touch, tell us where you want to live (in the Galil) and we will find it for you!

 

Buying Property in Israel?

Have you been sitting on the fence, looking at real estate in Israel but not yet taken the plunge? It could be that your hesitancy is working to your advantage. No guarantees of course. In this business, the real estate landscape can change quickly. But, in a very interesting Globes article interviewing Avi Tiomkin, a consultant on international hedge funds, real estate prices in Israel are declining, and in time, the prices you see on the market will more accurately reflect reality. According to Tiomkin, the prices we see now are a result of the combined efforts of Israeli banks and developers to keep prices higher, but Tiomkin believes this scheme is coming to the end of its life.

Tiomkin points to a number of indicators, such as a significant drop in housing sales, especially in the luxury market, a tremendous slow-down in demand by overseas investors and speculators, and a soon-to-be influx of new housing stock on the market. He paints a potentially gloomy picture too, depending upon the actions or inactions of the Ministry of Finance and the Bank of Israel. I am sure both will do everything they can to keep the real estate market in Israel strong.

Bottom line: we are entering a true buyers’ market. Should you sit it out longer? Maybe, but it could also be that the scenarios Tiomkin paints do not materialize, or are short-lived. It can also be that while you sit it out waiting for prices to fall further, someone else comes along and grabs your dream home. We suggest a little of both. Be careful about checking the market, doing research on comps, getting a second opinion on the true worth of the property and then jump in.

private home in safed, israel

private home in safed, israel

 

Government Cracking Down on Landlords

israel-irsOwn or Planning to Buy Investment Property in Israel?

Make sure you report!

Medinat Israel is getting serious about apartment owners who do not report rental income. Today in Jerusalem, a 36-year old yeshiva student was indicted for failure to report 1.36M in rental income from five units that he owns and rents out. He was charged with fraud under income tax and real estate laws. The report does not state if he is a dual citizen. Bottom line…Israel is the best real estate investment market in the world. But the days of black money may be coming to a close. Be careful.

Buying Property in Israel? This Could be Good News for You

Is a Dip in New Apartment Sales Good News for Buyers?

According to a recent Globes article, the number of new apartment sales in Israel is on the decline. The Ministry of Finance and Central Bureau of Statistics reports that while 1.7 percent more new apartments were sold in July 2016  than in June 2016, compared to July 2015, the number of new units sold has fallen by 19.3 percent. Looking at the year so far, the trend seems to be holding, as records show that from January to July, 2016, the number of new apartment sales in Israel was 6.7 percent below the number of sales during this same time period one year ago. The central Bureau of Statistics also reports that demand for housing is on the decline.

The biggest decline in new apartment sales is in northern Israel where new sales decreased by 15%. Following closely behind is Tel Aviv and then Haifa. Sales in the south, though, rose by 12%.

Lower sales across all sectors

In general, according the Ministry of Finance, fewer real estate transactions in general took place during the second quarter of 2016. This is primarily due to the drop in new apartment sales, but also in sales of affordable or starter homes. Investor purchases has also fallen off, with more investors looking to sell their properties than investors ready to purchase.

What does it mean?

IMG-20160720-WA0007If you are looking to buy a new apartment in Israel, it could mean that you will be able to negotiate a better price with the developer. In most cities in Israel, the developer needs sales in order to complete the project. If you look around in some northern cities, particularly in Tiberias, you might see some half-completed buildings. This is because the developer did not sell enough units or the early purchasers have failed to make the installment payments. Therefore, it could be that this is an opportunity for you to jump in and purchase a new apartment in Israel at a more reasonable price. Will it stay this way? Only G-d knows, but in the meantime, if you have set your heart on a new residence, this could be the best time to buy just what you want and have some money leftover.

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