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Jerusalem Real Estate Arnona Municipal Tax

What is the Jerusalem Real Estate Municipal Tax Called Arnona?

The Jerusalem arnona tax is a municipal or local council tax. In all parts of Israel, whether in cities, towns, moshavim/settlements, or on farms, the local municipality calculates how much arnona tax a home-owner will pay for his/her property.

The tax is billed by the municipality and the home-owner must pay it directly to the local council. The home-owner usually pays it as an upfront sum, or in installments every two months. The way the arnona tax is paid is negotiated with the municipality.

Renters are normally obligated to pay the arnona tax because it is a housing tax. Renters are only exempt from paying it if there is a clause in their lease that expressly excludes paying it.

How is the Tax Calculated?

There is no formula for how the Jerusalem arnona tax is calculated. Instead, the local municipality considers a variety of factors to determine the amount. These include:

1 – The Neighborhood and Location of the Property

The wealthier the neighborhood in which the property is located, the more expensive the tax is likely to be. Israel designates neighborhoods into Zones A – D, with ‘A’ being the most, and ‘D’ being the least, affluent.

Similarly, if the property is close to the town center, a business park, or a hub for transport, the more expensive the arnona tax is likely to be. The less of these that are near the property, the less it is likely to be.

2 – The Size of the Property

The larger the property, the more the arnona tax will be. If the property comes with a parking space, a bomb shelter, and/or a balcony, these are taken into account for the arnona tax as well.

3 – The Use of the Property

The Jerusalem arnona tax will be more if the property is used for commercial purposes rather than for residential ones.

4 – The Type of Building

The newer the building, the more the arnona tax will be. Conversely, the older the building, the less it will be; especially, if the building is made from materials that are no longer used or out of date.

Zone A consists of the neighborhoods:

  • The German Colony (notably Emek Rafiam Street)
    Katamon
  • Baka
  • Talbiyeh
  • Yemin Moshe
  • Rehavia (such as Azza Street, Ha’Keren Ha’Kayemet Le’ Yisrael Street, and Narkiss Street)
  • Mamila (notably Zamenhoof Street and Moshe Hess Street)
  • Givat Mordechai
  • Ramat Sharet
  • Har Nof
  • Most of the city center (such as King George Street, Ben Yehuda Street and Ha’Nevi’im Street)
  • Parts of Talpiot, Arnona, Kiryat Moshe, and Ramot

Zone B consists of the neighborhoods:

  • Nachalat Zadok
  • Morasha
  • Romema
  • Ge’ula
  • Givat Shaul Beit
  • Givat Mesua’h
  • Pisgat Zeev
  • Ein Karem
  • Parts of Baka (Derech Chevron and much of Derech Beit Lechem), Talpiyot, Arnona, Kiryat Moshe, Mekor Baruch (such as Rashi Street and Agrippas Street), Givat Shaul (the entrance), and Sanhendria

Zone C consists of the neighborhoods:

  • Me’ah She’Arim
  • Batei Israel
  • Shmuel Ha’Navi St.
  • Kiryat Yovel
  • Eir Ganim
  • The Old City (inside the walls)
  • Parts of Talpiyot and Sandendria

Zone D consists of the neighborhoods:

  • Beit Ga’la
  • Tantua

Cost To The Home-Owner For A Residential Property

The municipality charges the Home-Owner arnona by the square meter for his/her apartment/house for the year. Currently (2019), the municipality has rates for up to 120 square meters and rates for more than 120 square meters, both of which differ depending upon the zone in which the property is located.

Charge per square meter for the year for properties that are over 120 square meters:

  • Zone A – 110.38 NIS
  • Zone B – 100.30 NIS
  • Zone C – 77.38 NIS
  • Zone D – 63.25 NIS

Charge per square meter for the year for properties that are up to 120 square meters:

  • Zone A – 91.46 NIS
  • Zone B – 73.36 NIS
  • Zone C – 54.59 NIS
  • Zone D – 39.39 NIS

Example 1: A Home-Owner that has a property on Emek Rafaim (in Zone A) that is 130 square meters will pay 14,349.40 NIS (110.38 x 130) arnona to the Jerusalem Municipality for the year 2019.

Example 2: A Home-Owner that has a property on Derech Chevron (Zone B) that is 90 square meters will pay 6,602.40 NIS (73.36 x 90) arnona to the Jerusalem Municipality for the year 2019.

Cost To The Home-Owner For A Non-Residential Property

The municipality charges the Home-Owner arnona by the square meter for his/her non-residential property for the year. Non-residential property encompasses a large range of different types of property, with various uses. The cost of which (in 2019) differs depending upon the type of property and, often, upon the zone the property is located in.

 

Services and commercial offices that are over 150 square meters will cost the Buyer 342.08 NIS per square meter per year, regardless of which zone the office is in.

 

Services and commercial offices that are up to 150 square meters will cost the Buyer 331.45 NIS per square meter per year, regardless of which zone the office is in.

Workshops and garages will cost the Buyer:

  • In Zone A – 158.32 NIS per square meter/year
  • In Zone B – 117.61 NIS per square meter/year
  • In Zone C – 95.41 NIS per square meter/year.

Industrial plants will cost the Buyer:

  • In Zone A – 138.90 NIS per square meter/year
  • In Zone B – 103.05 NIS per square meter/year
  • In Zone C – 83.64 NIS per square meter/year.

Hotels and boarding houses with an area of over 2,000 square meters will cost the Buyer:

  • In Zone A – 146.07 NIS per square meter/year
  • In Zone B – 136.02 NIS per square meter/year
  • In Zone C – 109.66 NIS per square meter/year.

Hotels and boarding houses with an area of up to 2,000 square meters will cost the Buyer:

  • In Zone A – 118.58 NIS per square meter/year
  • In Zone B – 96.04 NIS per square meter/year
  • In Zone C – 69.83 NIS per square meter/year.

Schools, kindergartens, yeshivas and universities will cost the Buyer 107.34 NIS per square meter/year, regardless of which zone the property is in.

Places of worship will cost the Buyer 64.39 NIS per square meter/year, regardless of which zone the property is in.

Example 1: A Home-Owner who has a commercial office building that is 200 square meters will have to pay 68,416 NIS (342.08 x 200) in arnona for 2019, regardless of where the office building in in the city.

Example 2: A Home-Owner who has a workshop that is 100 square meters on Agrippas Street (near the Shuk, Zone B) will cost him/her 11,761 NIS (117.61 x 100) in arnona for 2019.

Example 3: A Home-Owner who has a hotel that is 1,500 square meters in the Old City (Zone C) will have to pay 104,745 NIS (69.83 x 1,500) in arnona for 2019.

Can a Homeowner get a Reduction on the Arnona Tax?

A Home-Owner cannot get a discount on his/her arnona for his/her non-residential property. However, a Home-Owner can get a discount on his/her arnona for his/her residential property if he/she falls under one of the scenarios below:

An Oleh Chadash

A Home-Owner can apply for a discount on the arnona tax while he/she is an Oleh Chadash (a new immigrant). Within the first two years after making Aliyah, an Oleh Chadash can get up to 90% off (i.e. he/she may only pay 10%) on his/her arnona tax on the first 100 square metres for a year after purchasing the property. (If the property is larger than 100 square meters, the rest will be paid at the non-discounted rate.)

Example 1: If an Oleh Chadash lives on Shay Agnon Street (Katamon, Zone A) in a property that is 100 square meters and gets the full discount, he/she may only pay up to 914.60 NIS (91.46 x 100 x 0.1 = 914.6) for arnona for the year 2019.

Example 2: If an If an Oleh Chadash lives on Shay Agnon Street (Katamon, Zone A) in a property that is 150 square meters and gets the full discount on the first 100 square meters, he/she may only pay up to 6,622.80 NIS ((110.38 x 100 x 0.1) + (110.38 x 50) = 6,622.8) for arnona for the year 2019.

 

A Senior Citizen

A senior citizen can receive up to 30% off (i.e. he/she will may only pay 70%) on his/her arnona tax for the first 100 square meters. However, the discount only applies for Israeli workers whose income does not exceed the average wage. (Thus, the discount does not apply to senior citizens outside of Israel.)

Example 1: If a senior citizen lives on Azza Street (Rehavia, Zone A) in a property that is 100 square meters and gets the full discount, he/she may only pay up to 6,402.20 NIS (91.46 x 100 x 0.7 = 6,402.2) for arnona for the year 2019.

Example 2: If a senior citizen lives on Givat Shaul Street (Givat Shaul, Zone B) in a property that is 150 square meters and gets the full discount, he/she may only pay up to 12,036 NIS ((100.30 x 100 x 0.7) + (100.30 x 50) = 12,036) for arnona for the year 2019.

Arnona Municipal Tax Exemption

A home-owner can apply for an exemption from paying the Jerusalem arnona tax for a one-time six-month period after purchasing the property. However, the exemption can only be utilised provided the property is unoccupied and devoid of possessions

Can a Home-Owner be Exempt from the Arnona Tax?

There is no exemption from the Jerusalem arnona tax for Home-Owners when it comes to non-residential properties. However, a Home-Owner can apply for an exemption from arnona for a one-time, six-month period after purchasing a residential property. But this exemption can only be utilized provided the property is unoccupied and devoid of possessions.

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