Friday, August 1, 2014

Patrick Drahi buys Tel Aviv site for NIS 130m

Billionaire Patrick Drahi, who controls HOT Telecommunication Systems Ltd. and i24news in Israel as well as Numéricable and SFR in France, and who was recently ranked the wealthiest man in Israel by Forbes magazine, with a fortune worth some NIS 10 billion, has decided, like many others, to invest his capital in real estate.

Indeed, he just bought the "Rav Kook" site in Tel Aviv's Neve Tzedek neighborhood for NIS 130 million, not including VAT. The site lies between Hamered, Eliezer Rokach and Ein Yaakov streets. There are several historic buildings on it with strict preservation orders, a few buildings marked for demolition, and some empty lots. Among the buildings designated for preservation is the Rabbi Kook Synagogue, built in 1904, and the study hall of Rabbi Abraham Isaac Kook, who was the first Ashkenazi chief rabbi of Palestine under the British mandate. The site was owned by Yeshuati, a company controlled by US businessman Yaniv Zaguri.

Monday, June 30, 2014

Lapid to expand zero VAT to Tama 38 projects

Minister of Finance Yair Lapid proposed today amending the zero VAT bill to include residential projects under National Outline Plan 38 or Tama 38 (earthquake retrofitting). The amendment appears in a draft of the bill published today for public comments. Lapid accepted a recommendation by the Israel Tax Authority and Israel Builders Association to include National Outline Plan 38 projects in the zero VAT plan. "The change will allow service providers in these areas to deduct the inputs tax in invoices issued to them for retrofitting services, thereby increasing the worthwhileness of these projects," said the Tax Authority.

The Tama 38 plan, first introduced in 2005, allows building owners to strike deals with contractors to give them additional building rights in exchange for reinforcing older buildings against earthquakes. The Pinui Binui program creates a framework for tenants of older buildings to be rehoused while their homes are demolished and rebuilt, with the contractor receiving building rights for apartments he can sell. Under the new proposal, work done under either plans would benefit from exemption from the 18% VAT either for construction or demolition work.

Tuesday, June 17, 2014

French hotel family buys Sea One tower

Electra Real Estate Ltd. and Oranim Ltd. have closed the sale of the Sea One high-rise project on Tel Aviv's seafront to the French Amouyal family, which operates hotels including the Meridien in Eilat, for NIS 370 million.

They paid the buyer NIS 16 million in compensation for transaction costs, which Electra Real Estate will report in its financial statement. The two companies owned the project on Hayarkon Street in equal shares. Electra Real Estate will report NIS 98 million in cash flow from the sale, NIS 88 million of which it will use to repay the seller's loan it gave the buyer.

Wednesday, June 11, 2014

Foreign Jews buying in Israel to escape the taxman

The phenomenon of foreign residents buying homes in Israel, which has become increasingly prevalent in recent years, is not only because of Israel’s attractive real estate market. Another reason is new limitations on European and American bank accounts and the need to empty them so as to avoid pay taxes and fines on previously undeclared funds. For some Europeans, a crackdown in the European banking sector on undeclared assets is driving them to move their money, and sometimes the destination is Israel, according to tax lawyer Leor Nouman. In addition, American tax authorities are pursuing undeclared assets in accounts held by Americans outside the United States. Over the past two years, Israeli and European banks have pressured their American clients to either withdraw their money from banks or provide confirmation from the U.S. Internal Revenue Service that the funds on hand have been declared to the tax authorities.

This is all the result of American legislation, the Foreign Account Tax Compliance Act, which requires banks outside the U.S. to report accounts held by American citizens. Banks that fail to cooperate are subject to harsh sanctions. In Israel, companion legal provisions requiring banks to comply will take effect next month. An estimated 300,000 to 350,000 people in Israel have dual U.S. and Israeli citizenship. In addition to those who openly declare their overseas accounts to the American authorities, some, it is thought, have either transferred the funds held here into the names of non-American relatives or have withdrawn the funds and bought real estate in Israel.

Monday, May 5, 2014

Tel Aviv tops the market for luxury apartments

When it comes to apartment prices, Tel Aviv is tops, according to a survey of the global luxury real-estate scene published in the Wall Street Journal. The Candy Global Prime Sector Report rated Tel Aviv as the most expensive city in the up-and-coming luxury market sector, beating out cities like Miami, Chicago and Melbourne by a long way.

The cheapest city was Chennai, India, where an entry-level, two-bedroom luxury apartment cost around $160,000 in March. A similar apartment in Tel Aviv cost $1.45 million. The report considered both economic factors, such as job availability and GDP, and what it termed qualitative aspects. The latter included the availability of cultural attractions and the prevalence of English as a first or second language.

Monday, February 24, 2014

Former Hapoalim chairman sold flat in 1 Rotschild

Shlomo Nehama has sold a 700-square meter apartment covering the entire 16th floor in the 1 Rothschild Boulevard tower in Tel Aviv to a foreign resident for NIS 45 million. The former Bank Hapoalim chairman owns another apartment on half of the building's 15th floor, where he reportedly intends to reside.

According to sources, at least five apartments in the project have been sold in the past three months by owners who had bought them on plan from the developer Habas HZ Investments Ltd in 2008-10. The sellers have made handsome profits.

Most of the other sales were of 300-square meter apartments for NIS 20-27 million, depending on the floor, and whether the apartment was sold in shell or completed condition. The average price is NIS 84,000 per square meter (ie. $24,000).

Wednesday, February 19, 2014

New law gives homebuyers more leverage with builders

A new consumer protection law for the housing industry passed today in the Knesset. Contractors must publish a detailed price list of the main fixtures and specifications in apartments under construction. The law, an amendment to sale laws, states homebuyers will now be able to request changes to the specification during a period of up to six months after the end of the foundation stage. Buyers who would want to install other items or less electric points etc will receive refunds based on the contractors' price lists. Up to now, the pricing of kitchens, floors, bathroom fixtures and others worth hundreds of thousands of shekels was vague, and solely in the hands of developers and contractors as 'gifts' to lure buyers, after this law takes effect buyers can now put a price tag on those extras, sometimes made compulsory by the developer to increase profits from deals with his suppliers.

Thursday, February 6, 2014

Tel Aviv: ₪3bn budget surplus, AAA credit rating

Tel Aviv municipality ended its 2013 local elections year's budget, with a cash surplus of 3 billion shekel, in a report published by S&P Maalot credit ratings. The report reveals "Tel Aviv will end 2013 on a positive horizon, with an operating surplus of 3.9% of its revenues and the city's financial liquidity is high by international comparisons". Maalot approved a perfect rating (AAA) for Tel Aviv municipality and noted that financially they forecast a continued scenario for the coming years. The report showed that the municipality had cash and liquid assets of 2.9 billion shekel and managed to lower bank credit loans, while many local municipalities struggle with growing debts and high interest on credit.

Tuesday, February 4, 2014

Israel Tax Authority investigating foreign landlords

In August 2013, the Israel Tax Authority (ITA) launched a targeted enforcement operation to detect tax evaders among the owners of luxury apartments in Tel Aviv. This operation resulted in the findings of hundreds of thousands of shekels of unreported annual income. Many of these apartment owners were foreign residents who rented out their apartments without reporting the rental income to the ITA.

Due to the success of the initial operation, the ITA decided to tighten the enforcement and in the middle of November launched a further raid, this time, over 200 luxury apartments in Ashdod owned mostly by foreign residents. The ITA teams requested from the tenants to produce the rental agreements and information regarding the rental payments. About 30 tenants immediately cooperated and provided the requested information. Another 80 tenants were required to produce the information in the following days together with the remaining tenants that were not present during the time of the raid. The ITA announced that foreign residents who are leasing apartments and not reporting the rental income will be summoned via their representatives, for further investigation.

Saturday, November 30, 2013

Capital gains tax extended starting in January 2014

The Economic Arrangements Law passed by the Knesset in August brought about a revolution in real estate tax legislation. The consensus against the tax exemption for investors and luxury homes led to its cancellation, but the new regulations also produced some casualties along the way. Israelis have become accustomed to enjoying the exemption, but anyone owning more than one home will be taxed on its sale starting January 1. Until now everyone, not just tax experts, knew enough to claim the exemption if they hadn’t sold another home in the previous four years. The traditional exemption, anchored in clause 49b-1 of the law, had an enormous effect on investing in homes in Israel. So with four words of sheer poetry the revolution was proclaimed: “Clause 49b-1 is void.” From now on we will have to pay a property-betterment tax when selling our homes even if we hadn’t sold another one during the previous four years, and only because we own a tiny extra pad in Tel Aviv’s Florentine neighborhood. The price of our home once again isn’t what we’ll pocket.