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There are ways to pay less municipal tax: some tips and warnings By Raz Smolsky, The Marker Correspondent Tags: Israel News, municipal tax Two neighbors living on the same street in the same city in apartments of about the same size may be paying different amounts of municipal tax. Why? Just because. Cities charge different rates. Within the same city, residents will also get charged differential rates depending on neighborhood and apartment size. (Of course, within the same neighborhood and for roughly the same dwelling, the rate should be about the same.) The Herzliya municipality, for instance, has split the city into seven zones, and divided the assets in each into seven subsets. You wind up with a matrix of 49 possible municipal tax - arnona - rates per square meters, ranging from NIS 28.50 per square meters to NIS 96.40. The most expensive area, "Zone A" includes the properties west of Ramot Yam Street, exclusive houses on the cliff overhanging the sea, and the Marina. Zone B includes Herzliya Pituach. The seventh, cheapest zone includes the Shaviv neighborhood and others. Advertisement Up in northern Israel, Kiryat Shmona holds no truck with such demarcations. It charges a flat rate of NIS 28 per square meters, never mind your area or the size of your apartment. Moving onto Tel Aviv, we find different rates on the very same street. Take Frishman: You'll pay less arnona if you're east of King Solomon Street than if you're west. On Marmorek Street there's a difference between the rate for odd-numbered houses and even-numbered ones. Adirim Street in Tzahala also sports more than one rate. Now you have the background information. Can you pay less? How? TheMarker has done some legwork for you and here are our findings: 1. Find out if you're eligible for any exemptions or discounts. If you have a child doing his or her regular service in the army (not a career soldier) who's supporting the family financially, you don't have to pay a penny in city tax. In fact, there is a long list of possible exemptions, they're just not widely known. (See the table.) Single parents, soldiers, girls doing national service, the disabled, the blind and more - all are eligible for a discount. In most cases, they don't get a full exemption, and the discount applies only to part of the apartment area, but money off is money off. To find out if you're eligible for a discount or exemption, go to the Interior Ministry Web site, where you can find the documents you need. 2. Soldier, try to get a discount on your part of the dwelling. If you're in the regular army (not a career soldier), stand warned: Cities don't like giving discounts on arnona because they figure you live with your parents anyway, explains Henrik Rostovitz, author of "Urban Arnona" and editor of the online journal arnona.co.il. "I think that the city should interpret the law in a manner that does give a discount on the relative area used by the soldier. If, for example, four people live in the apartment and one is a soldier, they could get a discount on a quarter of the arnona bill." In the same manner, Rostovitz says, "the city of Tel Aviv gives a discount for pensioners living with children according to their relative share of the arnona. The rest of the residents pay the full price." However, the courts haven't ruled on a relative discount for soldiers, he adds. "There have been attempts to apply the exemption," Rostovitz says. "One case lost at the Magistrates Court and another case remains pending." But there are other ways to get a discount, though they require understanding of how arnona is calculated, involving expert advice and possibly legal assistance, too. 3. The property is vacant? That's a 6-month exemption. If your property is unused, you're entitled to exemption from arnona for six months. You're entitled to one such window as long as you own the property, says Iury Deutch, a partner in the law firm of Peleg, Cohen, Deutch and Moskovitz. However, the apartment has to be completely empty of possessions. You can't just travel abroad for a few months and claim the exemption. When noise pays off 4. You're renovating? Exemption here too. If you're renovating an apartment on the grounds that it's uninhabitable, you can get an exemption and it isn't a one-off, either, nor is it limited in time. This is relevant to people who bought a second-hand apartment in terrible shape, or even to renovations to the family home. A renovation period of a few months could save you hundreds of shekels in arnona, but the case here isn't clear-cut. "Some of the cities argue that renovation doesn't render a dwelling uninhabitable, but happily for taxpayers, court rulings tend to favor them," says Deutch. "You have to know that this exemption, like on an empty apartment, only comes into force from the day you advise the city of the renovation. You can't complete the job and only then claim an exemption retroactively." 5. Testing the legality of arnona may not pay. If you think you're being overcharged and just want to check the legality of your monthly bill, this is the time to do it - you can only challenge arnona bills during the first three months of the year. But it isn't easy at all, because each year the city changes the rate relative to the previous year. "To test legality you have to check the development of the rate from 1986, because the basis year for arnona charges is 1985. Each year since then, the cities have added to the tax and only an expert can look into it," says Deutch. There are checks that a person can carry out alone, but not everybody knows the precise area of his apartment and hiring a professional measurer may not pay. The reduction in rate may prove to be pretty small, says Deutch. "Even if the measurer found that the area of the apartment is smaller, that's just the start of the battle with the city, because it will send its own measurers into the fray and lawyers to protect its position." You do want to keep an eye out for changes in billing, because the arnona should be pretty flat. A sudden increase should be a red flag, possibly indicating a mistake, he says. 6. Measure the apartment yourself, if possible. Each city is free to decide which areas to include in the measurement. The big cities - Jerusalem, Tel Aviv, Haifa and others - use the "net net" method, calculating only the floor area of the apartment without external and internal walls. The other method is "net gross" which does include the area occupied by external and internal walls. In both cases, it's easy enough to measure the area yourself. Things get tough when the city uses the "gross gross" method, giving itself a lot of wiggle room. That will include your proportional share of common space such as the stairwell, elevator shaft, lobby and halls, covered parking spaces, electricity boxes, plastic storage containers from do-it-yourself chains, and more. It's all but impossible to measure area by yourself in such cases: You'll need to have the city send a measurer, who may find that your billable space is bigger than you thought. 7. The city changed its measurement method? Legal no-no. Note ye well: The city may change its tax rates, but it isn't allowed to change its measurement method, says Rostovitz. Residents of Lod, for example, claim that the city changed its policy on measuring apartments. Instead of measuring wall to wall, it added common areas, storage areas, stairwells and the lobby. Objections have been filed and are undergoing handling ahead of legal steps. 8. Your bill depends on the use you make of the space. The basis for calculating city tax is the use you make of the space: residential, office, restaurant, store or bank. Residential use is the cheapest from the perspective of arnona, and as mentioned above, the rate may depend on the neighborhood. Then there are the apartments in which part serves as a home and part as an office, or take a doctor's house where the ground floor is a clinic, for example. In that case, the dwelling has to be split in two for tax purposes, explains Rostovitz. Trying to fudge the use of a room for a business may be tricky stuff, though many try it. A city inspector may have difficulty differentiating between a living room and a dietician's clinic. Or, he may not. Related articles: The municipal tax ruse Mayors snarl at plan to kill city tax Destroying local government Bookmark to del.icio.us   'shock and awe' Israel's strike on Gaza is the closest thing there is to a war with Hamas. 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