Negev Investors Oppose Kachlon Apartment Tax Plan

Finance Minister Moshe Kahlon is giving the high-tech industry a better deal. (Yonatan Sindel/Flash90)
Israel Finance Minister Moshe Kachlon. (Yonatan Sindel/Flash90)

Investors in southern Israel are demanding that Finance Minister Moshe Kachlon change his plan to tax owners of three apartments or more with what they called “putting an undue burden” on them. The investors own numerous apartments for rental in southern towns and cities, and claim that the tax violates several Basic Laws, as well as their rights as individuals. The investors are threatening to take the case to the High Court.

Beginning January 1, Israelis who own more than two apartments will pay a special tax, if Kachlon has his way. Under his proposal, landlords will pay a 1 percent tax per month on the assessed value of each home or apartment they own, beginning with the third property, up to a limit of NIS 1,500 per month, a total of NIS 18,000 a year. As the average value of homes in most cities is more than NIS 1.5 million, it is expected that most of the Israelis who will have to pay the tax will pay the full amount.

The rule is expected to affect 50,000 people, who own a total of 180,000 homes. The value of the home will be determined by a government-certified assessor, based on home value data supplied by the Central Bureau of Statistics for each geographical area.

But according to the investors, the proposal retroactively harms their investments, in addition to unfairly harming investors in apartments in the north and south, where housing prices and rents are lower. The tax they will have to pay will end up being a far higher percentage of the total rent they can recover than in the higher-priced center of the country, they said.

Elisha Cohen, who represents the group, said that typical of the group was one retiree who, due to a lack of jobs available to him, bought several apartments in order to be able to draw an income, which is more or less fixed, since rents do not rise as quickly in the periphery as in the center of the country. The tax will make a significant dent in his income and make it difficult for him to support himself, Cohen said.

“As is well known, homes in the center of the country are much more expensive than in the periphery,” he said. “It’s not fair that an apartment worth NIS 1.5 million in the Negev should be assessed at the same rate as an apartment in the center worth NIS 10 million. This is clear discrimination against the periphery,” he added.