Aspiring home buyers get help

Knesset bill would let mortgage interest payments be used as tax deductions.

home buyers 88 224 (photo credit: Ariel Jerozolimski)
home buyers 88 224
(photo credit: Ariel Jerozolimski)
In a move designed to help working-class Israelis buy homes, the Knesset on Wednesday approved the first reading of a bill that would allow interest paid on mortgages to be used as a tax deduction. Thirty-nine MKs voted in favor and 29 were opposed, including Finance Minister Ronnie Bar-On (Kadima). The bill was introduced by MKs Gilad Erdan (Likud) and Shelly Yacimovich (Labor). It was "revolutionary" and would help weaker segments of society, Erdan said. The bill is aimed at enabling home owners to claim tax deductions on mortgage interest payments for homes worth up to $180,000. "This bill will significantly help young couples, new immigrants and the middle class acquire homes," Erdan said in a statement. The resulting increase in the number of home buyers would cause a subsequent push in the construction industry and initiate growth in the economy, he said. The state would also see increased income, he added. The bill should have been become law years ago, real estate expert Dr. Haim Katz told The Jerusalem Post Wednesday. Israel had been lagging behind other countries in helping young people buy homes, he said. "Former soldiers who have completed their service, youths with low salaries and new immigrants often can't buy their own homes," Katz said. "But this will open the door to that opportunity for them. This must be welcomed." "Many young couples cannot allow themselves to buy apartments because of the heavy burden of mortgages," he said. "This law is clearly meant to provide social support to help people become home buyers who couldn't do so otherwise. I have no doubt that this will influence the market by giving a push forward to the homes market. We need to ensure that the needier sectors in Israeli society receive the real benefits." The bill also reflected well on "our general economic position," Katz said. According to Yuval Avitan, CEO of properties Web site Nadlan.com (http://Nadlan.com>), the bill would have little impact on those seeking to buy homes in central Israel. "We have to be realistic," he said. "Most apartments in the center, from Gadera to Hadera, are by definition more expensive than the apartments being targeted by this bill. "In central Tel Aviv, a four-room apartment costs $440,000. So this bill is really aimed at helping the weaker segments to buy cheaper homes in the periphery. This is not going to affect the middle class and upward." Avitan said the bill was part of a larger effort aimed at encouraging poorer Israelis who live in peripheral regions to work, but warned that despite its benefits, it could still push low-paid prospective home buyers into taking on heavy burdens. "If they commit to buy an apartment," he said, "they have to commit to paying off the mortgage, which puts them in a cycle that is difficult to break."