חוק לתיקון פקודת מס הכנסה (מס' 222), התשע"ו-2016Law for Amendment of Income Tax Ordinance (No. 222), 2016 · automatic translation · suggest a correction

Official summary of the law (Knesset)

Law for Amendment of the Income Tax Ordinance (Amendment No. 222), 2016 (hereinafter – the Law), was passed in second and third reading on 28 March 2016. The Law establishes the following arrangements to ease and encourage the operation of real estate investment funds focusing on investment in rental housing projects, which are public companies whose shares are traded on the stock exchange and which meet additional conditions set out in the Law, and which have acquired real estate for rental housing purposes or income-producing real estate for rental housing purposes. The encouragement to establish and manage these funds is expressed through the granting of various reliefs, including an organizational period of 3 years until registration for trading on the stock exchange, a reduced purchase tax of half a percent when acquiring real estate, and rental income and real capital gain taxed at a rate of 20%. The Law allows leverage of 80% instead of 60% regarding income-producing real estate for rental housing purposes and real estate for rental housing purposes. The purpose of these reliefs is to encourage the creation of additional financial instruments that will allow the public to invest in real estate indirectly and have it managed by a specialized and dedicated body. Regarding every real estate investment fund, the Law extends the period during which a fund not engaged in rental housing is required to issue shares to the public. In addition, the Law establishes various reliefs for real estate investment funds, including a mechanism for deferring the betterment tax liability on the transfer of assets to the fund after an issuance, an exemption from value added tax on the purchase of apartments by the fund, and allows funds to acquire real estate associations under conditions specified in the Law. The Law conditions the benefits granted therein on the controlling owners of the fund diluting their holdings in it after a period during which its shares are traded on the stock exchange, and establishes a unique mechanism for dormancy of the controlling owners' shares to ensure this restriction.

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Reservations to the second reading

2 reservations were filed: proposed changes to the text the committee brought to the second and third reading.

The reservations to Section 2 seek to tighten the conditions on shareholding in a real estate investment fund and to set a minimum rate of real estate for residential rental distributed nationwide.

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By faction

• Zionist Union opposition · 2 reservations · 24 members
• Yesh Atid opposition · 2 reservations · 1 member
• Yisrael Beytenu opposition · 2 reservations · 6 members
• Meretz opposition · 2 reservations · 5 members

A joint reservation counts for every faction whose members filed it.

Asked to speak: Yoav Kisch (Likud), Uri Maklev (United Torah Judaism)

Proposers and reservation numbers are extracted automatically from the committee version, and the count is checked against the numbers printed in it. The descriptions are an automatic summary. Committee version for the second and third reading (PDF)