Globes, Uri Khodi, 07.07.2020

The Knesset Finance Committee has confirmed that the tax exemption for housing enhancers will be extended due to the Corona crisis. This is an extension of the period in which a housing enhancer who bought a new apartment and, before selling his old apartment, could sell the apartment with a tax exemption. The stipulated period is seven months, which in fact will not be counted in the number of months the tax authority counts. Currently, this is an 18-month period for sale without taxation for enhancers. According to the new resolution - this period will be extended to 25 months - two years and one month. We note that the period that will not be counted in the months is set from March 1 to October 1 only.

It was originally a 6-month period, but as part of the Finance Committee discussion, MK Moshe Gaffney asked that in special cases, the Finance Minister could also set an extension for a time, due to the fact that there are people who "fall between the chairs" and need a later extension. More than the beginning of September, at the discretion of the Finance Minister.

In the Tax Authority rejected the proposal, but suggested that in parallel to extend the period for an additional month. That is, the period will not be counted until October 1st. Thus, it was decided that the period would be extended by seven months in total. As mentioned, this is not a sweeping rejection of the period where a housing enhancer will not be taxable, but seven months if the enhancer enters into it (as mentioned - early March to early October) these months will not be counted and the count will resume soon thereafter.

In the background of the discussion, we can point to reports from the Chief Economist's figures in the Ministry of Finance, according to which the rate of housing enhancers who bought an apartment and have difficulty selling their old apartment is increasing. This relief, which is currently forming in the Finance Committee, is important so that those apartment owners do not find themselves facing a high tax payment.

It should be noted that a few years ago, the period when housing enhancers were able to own their old apartment was shortened in parallel with the purchase of another apartment. If once this period was two years, under the time of Finance Minister Moshe Kahlon, that period was shortened to only one and a half years by the time that is expected to expire next year. The rationale for shortening the period was reports that apartment owners would buy a new apartment and wait as much as possible with the sale of the old apartment to enjoy the increase in the value of the apartment at the same time. The Finance Ministry argued that this move is contributing to the rise in prices, and therefore shortened the period.