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Assessing profitability
Interest rates in Israel are a very important topic for businesses, individuals and community administrators.
All individuals and companies requiring bank loans, investments or other financial transactions need to know interest rates in order to assess their profitability and ensure the best possible financial conditions.LIRE AUSSI : Comparatif | Is it better to be in Hevra Baam or Ossek Mourche?–https://youtu.be/SIkUI0jFJK0
Interest rates are governed by the Bank of Israel
Interest rates in Israel are defined by the Bank of Israel (BI) and are published in advance for consumers, lenders and investors.
Interest rates are governed by law and are applied to all loans and borrowings.
In Israel, the interest rate applied to bank loans is set each month by the Bank of Israel, and may be higher or lower than the announced key rate.
Similarly, the interest rates applied to credit lines are based on the rates offered by banks, and are therefore often lower than those announced by the Bank of Israel.
Variable interest rates
Interest rates vary according to loan type and term.
Short-term interest rates (less than 12 months) are generally lower than long-term interest rates, which are generally higher.
Interest rates for mortgages are generally lower than most others because of their long duration, and are regulated by Israeli law.
How to optimize Israel's rising interest rates for tax purposes?
We'll give some examples of the tax optimization we can achieve with rising interest rates in Israel.
Real estate
- In the sale of apartments and other real estate, mortgage interest costs in Israel will be deducted for the loans taken out to finance them when calculating capital gains tax.
- Taxation of rental income under the "Normal Regime" (income and expenses)
Under this system, rental income is calculated by deducting expenses related to the rental, including rent reduction and interest paid on loans taken out to purchase the apartment.The result of this calculation may result in a small profit on which tax will be less than 10% of gross income, or even a loss for which no income tax is due, and is even considered a deductible expense in calculating tax on the sale of the apartment and/or carryable as a loss on rental income for subsequent years. - In the same tax year, losses on one apartment can be booked against the rental of another.Don't opt to pay 10% right away, but make the most of your rental income by paying less tax.
Interest-bearing shareholder current account
The remunerated shareholder current account is a financial tool enabling a company's shareholders to lend money to the company in exchange for a fixed rate of interest. This type of account is often used to finance short-term investments or specific projects.
The remunerated shareholder current account is a way for shareholders to play a greater role in the management of the company and receive additional income from their investments.
By lending money to the company, shareholders can help finance projects that could increase the company's value and, consequently, their return on investment.
The terms and conditions of interest-bearing shareholder current accounts are set by the Israeli tax authorities. Interest rates may vary depending on inflation rate in Israel during the year.
It is important to note that interest-bearing shareholder current accounts are not taxable in Israel.
As with any investment, there is a risk of capital loss in the event of company bankruptcy or financial difficulties. It is therefore important for shareholders to understand the risks before lending money to the company.
However, if the terms of the remunerated shareholder current account are well defined and the company is in good financial health, this option can be an attractive way for shareholders to receive additional income from their investments.
In conclusion, the remunerated shareholder current account is a financial tool that enables a company's shareholders to lend money to the company in exchange for a fixed rate of interest. non-taxable. This option can be an interesting way for shareholders to become more involved in the management of the company and receive additional income from their investments. It is therefore important for shareholders to understand the advantages of this interest-bearing current account:
- Exempt income for the shareholder
- Recognized tax savings for the company
Do you have a question?
Contact us
GOOD TO KNOW!
An ossek mourche or an ossek patour who takes out a commercial loan for his business needs will in fact only pay half of the loan.
In fact, the tax savings can be as much as 50%.READ ALSO: TAX IN ISRAEL: ONLINE SIMULATION.
SCI israelienne a l'IR, peut être la meilleure solution
In a separate article, we'll look at the advantages of setting up an IR SCI in Israel during a period of inflation.
Don't hesitate to ask us about the topics to be covered:
- Shareholder's tax-exempt current account
- No taxation of rental income during the period the property is held
- Maximum tax optimization on resale
- Creation of a subsidiary of a French SCI subject to corporation tax without paying dividends
- Benefits for seniors
What's the best financial decision?
It's important to understand Israel's interest rate laws and trends in order to make the best financial decisions.
The Bank of Israel publishes regular updates on its interest rates, and the Dray & Dray team of chartered accountants is on hand to offer advice and help you make the right financial decisions.
In a nutshell:
Even interest rates in Israel can be optimized for tax purposes...
Don't hesitate to contact our team of financial management experts for a more in-depth discussion.
Your questions - our advice
- Is it more advantageous to buy apartments through a company?
- Is paying back your loans the best way to go at the moment?
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