Renters: Landlords Who Raise Rent Can Expect Visit From the Tax Man

Israeli Finance Minister Moshe Kahlon (Noam Revkin-Fenton/Flash90)
Finance Minister Moshe Kahlon. (Noam Revkin-Fenton/Flash90)

Owners of multiple apartments, who are to be subject to a new tax that will require them to pay a hefty amount to the government, are threatening to raise rents – and tenants are not taking the threats lying down. In a letter to Finance Minister Moshe Kahlon, a group representing tens of thousands of tenants said that they would take steps against those who tried to raise rents – like informing the tax authorities of their landlord’s new windfall.

Beginning January 1st, 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.

Kahlon and others in the Ministry supporting the tax believe that the rental market is big enough to absorb the tax without leading to rent increases, but recent media reports have quoted apartment owners who will be subject to the tax as saying that they will “be forced” to increase rents. But leaders of the Renters Committee, a nationwide group that represents renters all over the country, said they will not buckle before the threats of landlords.

In the letter to Kahlon, the group said that all landlords who raise the rent will find themselves reported to tax authorities, who will no doubt be curious as to how the landlords plan to use the extra money they earn, and if they have paid taxes on it. As many landlords, the group believes, do not pay taxes on rental income at all, the threat of reporting should be sufficient to keep rents in check.

Kachlon’s office has not responded to the letter.