Israel introduces controversial VAT exemption on homes

First time buyers of houses are set to be exempt of Israeli VAT in a controversial agreement.

The measure is seen as important to help grow home-ownership in Jerusalem and the new territories, including the West Bank. However, it would only be available to persons who had completed their military services. This means that all Arabs living within the greater Israeli region will not be eligible. There may be some compromise on this last point, with a lower threshold price for non-military service buyers.

There will be caps, including only on purchases of apartments of NIS 16,000 per meter squared.