Israel Enacts New Property Tax

May 20, 2013 Taxation in Israel

Jerusalem propertyJERUSALEM – Israel is looking to hike taxes in an effort to increase the supply of rental houses available in the country.

On May 19th the Minister of the Interior of Israel Gideon Saar announced that he has signed new legislation to implement a 3.5 percent property tax on residential homes which are unoccupied by the owner or a renter.

The move is intended to increase the availability and affordability of property on the residential property market by encouraging home-owners to make available any property which they are currently not using and by penalizing who hold onto the so-called “ghost properties”.

The raised tax rate will be applied to all residential properties which are currently unoccupied, with the only exception being homes which are held by individuals living in Israel who do not own more than one property but do not live at their own property due to justifiable personal reasons.

It is currently estimated that there are over 46 000 unoccupied residential properties in Israel.

The hiked tax is not the only recent example of the government using tax measures to boost the availability of housing, with Finance Ministry announcing last week that it is now looking at new taxes which could be charged on property developers who intentionally delay the completion of residential houses in order to raise demand and to artificially inflate the prices.

Photo by runneralan2004