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September 20, 2014 / 25 Elul, 5774
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Double Taxation on Empty Apartments in Israel

Any apartment that sits empty for 9 months out of the year will be taxed double the normal rates.
empty apt

If you are a vacation-home owner in Israel, the State is about to dig a bit deeper into your pockets..

The State does not actually want to just find ways to take your money. What they actually want is that these vacation homes should not sit empty all year round. They think that by doubling th taxes on empty apartments, the owners will be encouraged to rent those apartments out instead of letting them sit empty. The thought is that rental prices of apartments, for example in Jerusalem, are high due to a shortage of available apartments. At the same time there is a significant number of apartments that sit empty for much of the year while the owners live elsewhere, perhaps even abroad. Those empty apartments have a significant part in crating the shortage of available rental homes, thus driving prices too high to be considered affordable..

The Finance Committee of the Knesset yesterday approved the collection of double taxes on such empty apartments. The details presented show that in Israel there are 46,855 empty apartments, with the 3 main cities grabbing a large portion of those numbers: Tel Aviv has 4746 empty apartments, Haifa has 3445, and Jerusalem has 3429.

The rule will be that any apartment that sits empty for 9 months out of the year will be taxed double the normal arnona rates. This new system of double arnona will be in place for a period of two years, after which the entire issue will be reevaluated to see how the change actually affected the real estate market.

Local authorities will have the ability to decide on which apartments to charge double arnona, as well as having the ability to grant exemptions based on unique circumstances.

So, if you have apartments that sit empty, be prepared to pay more arnona. Or rent it out. Or leave your lights on. From what i understand, the method to be used for determining if an apartment sits empty is based on how much or little electricity usage will be recorded. If an apartment registers below a certain amount of electricity, it will be considered empty and its arnona will be doubled.

Will this help? Surely some people will decide to rent out their empty apartments, or maybe sell them, while surely some will be willing to be double arnona to avoid having people mess up their vacation home. Not everybody wants to or can afford to pay double taxes (that are probably already high anyway) just because they have a vacation apartment or might be rich. At the same time, if they agree to rent out these apartments, will renting out luxury apartments at high rental prices really solve the problem of affordable housing for regular people? Will these owners rent out their luxury apartments to students and young couples who cannot afford the high rental prices? I am not so sure that targeting these apartments is the solution that will have a significant effect on the market..

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2 Responses to “Double Taxation on Empty Apartments in Israel”

  1. shalom says:

    or just annex the west bank and start building homes for cheap. there’s a real solution!

  2. Adele Bloom says:

    Well that is not fair.. Many Americans have apartments and they cannot stay in Israel forever they have homes here as well .. some just go over to see their children and grandchildren and have business here in the USA.

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