Tel Aviv to Impose Special Tax on ‘Ghost Apartments’

Following in the footsteps of Yerushalayim, the Tel Aviv Municipality this week dispatched notices to owners of apartments in the city that have been empty for months, demanding an additional charge for “ghost dwellings.” This law was recently passed by the City Council. The city is currently focusing on apartments which were empty between December 1, 2013 and November 30, 2014.

Owners of apartments which were unoccupied during that period are being charged a special surcharge of NIS 220.78 per square meter. For a 100 square meter apartment – a common size for such luxury dwellings – the surcharge is equivalent to approximately $5,700.

The city said that it had identified 1,400 homes which fall into this category – and that means there were 1,400 fewer apartments on the market for renters, raising rent costs due to the reduced supply.

Yerushalayim recently doubled the surcharges on so-called “ghost apartments” in the hope of encouraging owners to either sell them or rent them out. Many of the apartments are owned by Jews living abroad, who hold onto them either as an investment in Israel’s hot real estate market, or as ‘insurance’ for the future.

Owners of the apartments who feel they are being unfairly charged are welcome to file a dispute, but city officials averred that they did not believe many would, since they are living abroad anyway.