Jerusalem to Double Tax Rate on Vacation Homes That Stand Empty Most of the Year

Measure against 'ghost apartments' aims to coax absent homeowners into renting their properties.

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Apartments near the Chords Bridge in Jerusalem.
Apartments near the Chords Bridge in Jerusalem. Credit: Tal Cohen

Jerusalem’s ghost apartments – vacation homes owned mostly by foreigners that stand empty most of the year – will be hit with a big increase in their municipal taxes (arnona) next year as the city tries to make more housing available.

The capital’s city council on Wednesday approved a plan to charge ghost apartments a rate of 223.56 shekels ($57.30) per square meter, unless they are rented to tenants. That is double the top rate the city now charges.

“Adding thousands of ghost apartments to the market will dramatically increase the supply of homes for rent to young people and bring down rental costs in the city,” said Mayor Nir Barkat, who had been lobbying for the increase and last week finally won the backing of the finance and interior ministries for the move.

The Trajtenberg committee of social-policy reform estimated in 2012 that there were about 47,000 apartments around the country unoccupied most of the time, including 3,429 in Jerusalem.

But people in the local real estate sector were critical of the increase, noting that for the past decade and a half Jerusalem had encouraged to build luxury apartment towers, especially in the center of town, aimed at foreign buyers. If the city didn’t want part-time foreign residents it should have encouraged builders, they say.

“It’s a populist step that will only hurt foreign residents who bought apartments in Jerusalem, pay the full arnona rate now and barely use any city services, so they’re subsidizing local residents,” said Oren Cohen of the real estate agency Century 21 in Jerusalem.

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