An increase in the purchase tax on apartments for investments resulted in a 42% surge in apartment sales to a record 16,100 in June, according to statistics published by the Ministry of Finance.
Investors evidently rushed to make their acquisitions in order to beat the deadline for the new tax regime, which took effect at the end of June. The June figure was 15% higher than the previous record set in December 2013, Globes reported.
The surge boosted state tax revenue by 1 billion shekels in July, according to a budget briefing from the Ministry.
The increase in revenue brought the budget deficit down to an annualized 2.1%, but the Ministry of Finance said that at this stage its revenue forecast stays unchanged, and the 2015 budget deficit forecast remains at 2.9%.
July tax revenues totaled NIS 26 billion, NIS 2.4 billion more than the revised forecast for this month. Half of the increase came from real estate tax revenue: betterment tax revenues soared 73%, and purchase tax revenue jumped 50%.
The Ministry of Finance, however, regards this increase as a temporary one that will not be repeated, and does not intend to again revise its revenue forecast for 2015, which the Ministry of Finance chief economist revised only recently in preparation for the 2015-2016 budget approved by the government.
The impact was felt heaviest in the Tel Aviv area, with a 120% rise in June in apartments purchased by investors, in comparison with May. Purchases by investors were up 100% in Netanya.
Apartments purchased by young couples were also up in June, but by only 4%. On the other hand, the number of those purchasing a better apartment to replace the one they had jumped 30%.
However, the tax revenue bulge was not expected to last. “Initial figures for July indicate a sharp drop in the number of transactions, and a particularly low rate among investors,” the Ministry of Finance said in a statement.