Jerusalem’s Ghost-home Owners Get First Bills With Higher Tax Rate

Measure aims to alleviate housing shortage and high prices by raising cost of leaving a home unoccupied most of the year

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Jerusalem has sent out its first double-rate municipal tax (arnona) bills to the owners of homes that are unoccupied most or all of the year.

According to a new municipal regulation, some 1,700 owners of so-called ghost apartments are getting tax bills averaging 224 shekels ($58) a square meter annually, a rate that works out to an annual cost of about $5,800 for a relatively small, 100-square-meter residence.

The city is negotiating with some 4,800 other homeowners who have appealed the municipality’s designation of their homes as ghost apartments in warning notices sent by the city.

Jerusalem has thousands of ghost apartments, most of them owned by foreigners who use them for a few weeks a year during holidays and vacations and leave them empty the rest of the year. Jerusalem expects the higher arnona rate to yield about 18 million shekels in extra tax revenues in 2016, but is also hoping the measure will alleviate the city’s housing shortage and high home prices.

“Doubling the tax will put ghost apartments into the rental market, as well as create significant additional revenues for the city which will be used for affordable housing,” said Deputy Jerusalem Mayor Ofer Berkowitz. “Just this week, I heard of an apartment being sold because of the higher tax we’ve imposed.”

Social-justice protestors in Jerusalem blamed ghost apartments for part of the city’s housing shortage and high prices when they took to the streets in 2011, but the city’s efforts to double the arnona ran into legal problems over the definition of ghost apartment.

In the end, the Knesset Finance Committee solved the problem by officially designating ghost apartments as those occupied for less than three months a year. Officials determine whether a house meets the standard by checking water meters; some 6,500 homes where usage is zero most of the year were designated a “house not in use” and received warning notices.