Jerusalem doubles ‘ghost apartment’ taxes as housing costs soar
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Jerusalem doubles ‘ghost apartment’ taxes as housing costs soar

From 2016, property tax on empty homes will be twice the city’s current highest rate; mayor says this will aid young renters

Built in 1990 across from the then-still-rundown Mamilla neighborhood, this enclosed community is Jerusalem's primary ghost town (Courtesy Wiki Commons)
Built in 1990 across from the then-still-rundown Mamilla neighborhood, this enclosed community is Jerusalem's primary ghost town (Courtesy Wiki Commons)

Jerusalem municipality is set to double property taxes on homes whose owners live abroad, in a bid to reduce the number of so-called “ghost apartments” in the city.

Beginning in 2016, the city will exact an NIS 223.56 per square meter ($5.33 per square foot) tax annually for an apartment that stands empty of either owners or renters.

The figure is twice the current highest property tax being levied in the city’s most expensive neighborhoods.

The move is “an important tool for making thousands of apartments available to young families in Jerusalem,” said Mayor Nir Barkat, who initiated the new policy.

Jerusalem’s real estate market is notoriously expensive, with housing prices continuing to rise faster than average incomes. Apartment purchase prices rose 6 percent in 2014, according to the Central Bureau of Statistics. With three-room apartments renting for between NIS 4,500 and NIS 5,500, Jerusalem is among the country’s most expensive places to live.

One cause for the rising costs are thousands of foreign residents who purchase homes in the city, but spend only brief periods in the apartments on visits. In a Facebook post Wednesday, Barkat suggested some 10,000 such apartments lie empty in the city.

Jerusalem Mayor Nir Barkat, January 2015. (Channel 2 screen capture)
Jerusalem Mayor Nir Barkat, January 2015. (Channel 2 screen capture)

“Young people are Jerusalem’s oxygen, and we are always working to attract young people and young families to the city,” Barkat said. “The addition of thousands of ghost apartments to the market will dramatically increase the supply of apartments available for rent by young people, and will lower rent prices in the city.”

The tax boost comes as part of a city plan to fight the rising costs through increased construction of new homes and taxation that disincentivizes ownership of more than one property.

The move was approved last week by Finance Minister Moshe Kahlon and Prime Minister Benjamin Netanyahu (in his capacity as acting interior minister), the municipality noted in a statement Wednesday.

The added revenue from “ghost apartments” will be used to “advance” cheaper housing for “young people and young families,” the statement said. It was not clear whether this would be accomplished through new rent subsidies or by another mechanism.

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