Increase in property taxes on unoccupied apartments in Israel

The Municipality of Tel Aviv announced that it is increasing the property taxes (“arnona“) of approximately 1,400 “ghost apartments” to 220.78 NIS per square meter.  Property taxes are between 50 and 85 NIS 85 per square meter for apartments in Tel Aviv up to 140 square meters (depending on the area in ​​the city). On average, this increase translates into an additional 10,000 NIS per year for ghost apartment owners.

A ghost apartment is defined as an apartment that is not occupied for at least nine months of the year. According to government figures, there are around forty-seven thousand such apartments in Israel, many of which are owned by foreign residents, and mainly in major cities, Tel Aviv, Jerusalem and Haifa.

Tel Aviv Municipality has managed to find 1,400 such apartments, it estimates that there are thousands more ghost apartments that it has not yet been able to identify.

Hundreds of property owners in Haifa whose apartments are unoccupied, received a notice last month from the municipality that they are obligated to pay double arnona – an increase from approximately 10,000 NIS to 20,000 NIS per year. This higher payment will be charged retroactively to the beginning of the year.

Jerusalem municipality announced in December 2015 that it will begin to collect double property taxes on empty apartments from the start of 2016. The municipality estimate that there are currently around 9,000 apartments that meet the definition of a ghost apartment, and most of them belonging to foreign residents.

The steps taken by local authorities are in accordance with the regulations approved in the Knesset.  The measures were supposed to come into effect back in 2015, but the municipalities only began to take action this year after identifying a large number of ghost apartments. The increase in property tax  stands behind the claim that the measures will encourage rental of unoccupied housing and thereby increase the low supply of housing in these cities and in particular in Tel Aviv.

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