Tax On Empty Apartments Doubled by Finance Committee
On Monday, the Finance Committee unanimously approved the application of doubled real estate tax (arnona) on empty apartments, of which there are an estimated 47,000 units.
According to the new law, an apartment will be considered empty if unused for 9 consecutive months, or 9 cumulative months in the real estate tax fiscal year, from January 1 till December 31. The new rules will come into effect starting January 1, 2014.
The goal of the adjustment is to encourage owners of empty apartments in city centers to put their property to use, either by selling it or putting it up for rent.
Finance Committee Chairman Nissan Slomiansky (Jewish Home) said "the Finance Committee placed as its goal to help solve the housing crisis, among other things by putting city center apartments to use and increasing the supply of apartments for rent."
By eliminating empty apartments the Committee hopes to accomplish two targets. First it aims to alleviate Israel's housing crisis, as housing prices in the nation's real estate bubble continued rising in the third quarter of 2013. Additionally, the rules aim to reduce low-population "ghost neighborhoods" in the center of Israel's large cities.
Renting an apartment in large cities can be even more expensive on a monthly basis than buying. Rental apartments in Israel are supplied almost solely from the private housing market; there are nearly no apartment buildings that are owned by a landlord for rental purposes, as there are in the US and other countries.
The rental shortage is especially acute in Jerusalem, Tel Aviv, Netanya, and other large cities, where foreign residents have bought prime homes and apartments for investment purposes or as vacation homes, coming to live in them for just a few weeks out of the year.
The new rules doubling tax on empty apartments were authorized by Interior Minister Gideon Sa'ar in May, pending approval by Finance Minister Yair Lapid.