A law doubling property tax (arnona) on empty units, enacted in 2012 is soon to go into effect. Minister of the Interior Gideon Saar has signed regulations to double arnona (local property tax) on empty apartments, Minister of Finance Yair Lapid will complete the regulations.
In 2010 the government began taking steps to prevent a real estate bubble which began in 2005 where property prices were exponentially increasing in value. Austerity measures on mortgages went into effect in early 2011 as well as incentives given to investment property owners to release their apartments without paying the usual sales taxes on non-primary residences. These actions definitely put a chilling effect on the market which has lowered prices nationwide for two years.
This new measure is intended to place negative pressure on those holding empty units, builders, heirs, owners hoping for a higher return on sales, by doubing their monthly property tax rate. The government action is attempting to encourage placing empty apartments on the market for sale at reduced prices or for rent and increase the housing supply. The regulations are in line with government decisions to expand the housing supply and lower prices.