The Knesset Finance Committee voted against approving for legislation a bill that would have placed a special luxury tax on heirs who inherit an apartment. The bill, its authors said, was designed to encourage owners of inherited apartments to sell them, thus increasing the number of apartments available for sale, and possibly lessening pressure on prices.
A representative of the Treasury who spoke at the meeting, Eran Nitzan, said that the law would bring about the sale of some 50,000 apartments in the short-term. “All we want to do is restore the situation to what it was before 2005, when a luxury tax was imposed on homeowners who bought a second home but failed to sell their first one within 12 months.”
While the concept was admirable, said committee chairman MK Rabbi Moshe Gafni, it was an unfair idea. “This will badly hurt heirs,” he said, “especially in cases where multiple heirs are in disagreement on whether or not to sell an apartment.”
In addition, the committee voted down a proposal to institute an excise tax that would be imposed on owners of more than one home, with exemptions given to those who sell them within a specified time. MKs slammed that proposal as well, saying that it would hurt owners of homes in peripheral areas, where it was more difficult to sell apartments.
MK Dov Hanin (United Arab List) said that even he “as a socialist, am against this idea, because I realize it will raise prices even further, despite the fact that I am not opposed to taxing investors. Quality of life always trumps property rights, as far as we are concerned. The state needs to develop new outlets for investment, and not just raise taxes, which will just cause people to cash in and hide the money in their homes. With so much cash floating around, the effect of such real estate taxes will be to raise prices on homes, not lower them.”