Finance C'tee approves double tax for empty apartments

Real Estate Appraisers Association in Israel chairman Ohad Danus: The measure will make no difference whatsoever.

Today, the Knesset Finance Committee approved regulations submitted by Minister of Internal Affairs Gideon Sa`ar and Minister of Finance Yair Lapid to collect double arnona (municipal property tax) on apartments that are not in use - “ghost apartments.” The initiative behind these regulations came from the Hitorerut B'Yerushalayim movement, which raised the issue during the social protests two years ago. The regulations state that the municipal property tax will be double for residential apartments that are vacant for 9 months a year, consecutively or cumulatively. In addition, it was decided that the regulations will be instituted as a provisional ordinance for two years, during which time their execution and their impact on the housing market will be assessed. The regulations go into effect January 1, 2014.

The regulations will effectively allow local authorities to decide, with the approval of the Ministers of Finance and Internal Affairs, to create a new class in the municipal tax ordinance, according to which owners of unoccupied apartments will be required to pay double the municipal property tax. According to the regulations, local authorities that decide to implement the directive will be able to make exceptions, in certain cases, at their discretion, "in order to avoid harming citizens whose homes come within the category in question because of special circumstances". The option of making exceptions opens the door to the possibility of each local authority setting its own criteria for the implementation of the directive, which is likely to neutralize the original intention of the regulation.

As soon as the regulations were approved, there were those ready to pour cold water on the enthusiasm over them, saying that they would have little impact on the housing market. “Besides the fact that it will be very difficult to enforce the regulations, they will not be the least bit effective in lowering home prices,” said Real Estate Appraisers Association in Israel chairman Ohad Danus “It is obvious that these ‘ghost apartments’ are not standard apartments, but are generally luxury apartments, in very upscale neighborhoods. The apartment owners are wealthy people, who can also live with having the lights on nonstop in their apartments, in order to pass the electricity quota set by the Finance Committee. This is another populist measure that will make no difference whatsoever to young couples or the middle class.”

Published by Globes [online], Israel business news - www.globes-online.com - on December 9, 2013

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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