Legislation to revoke tax exemption for abandoned Jerusalem buildings advances

"This is a very important initiative that will have a great economic benefit for the city," says deputy mayor Ofer Berkowitz.

June 8, 2014 19:51
2 minute read.

A Jerusalem street [Illustrative]. (photo credit: MARC ISRAEL SELLEM)


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Legislation requiring owners of the capital’s nearly 2,000 vacant commercial buildings to pay markedly increased tax fines is one step closer to being ratified into law, following a Sunday Knesset meeting led by the Ministerial Committee for Legislation.

According to Deputy Mayor Ofer Berkowitz, present commercial property laws stipulate that once a building is declared abandoned its owners are not required to pay property taxes for three years, and can extend nonpayment for an additional five years.

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Berkowitz, who spearheaded the initiative, said the tax loophole allows owners of such buildings to hold on to valuable commercial property while draining the capital’s already anemic economy of potential revenue and employment opportunities.

“Last year the municipality lost NIS 32 million from unpaid taxes, because according to the current law the property owners can keep an abandoned property for years without paying for the financial losses such properties cause the city,” he said following Sunday’s meeting. “Now we are saying that the owners have one year to determine what they are going to do with their building, and after that must pay taxes according to the size of the building. This will put pressure on the owners of the abandoned buildings to use them to help contribute to the needs of the city.”

Berkowitz said the capital presently has over 450,000 sq.m. of abandoned properties, including in the city’s most coveted and expensive downtown area.

“I believe this law can improve the economy, because these properties are already built and simply need to be renovated to make them useful, which should only take a short time,” he said.

MK Boaz Toporovsky (Yesh Atid), who attended the meeting, echoed Berkowitz’s sentiments, stating that the proposed law will “result in the owners of abandoned buildings no longer receiving a gift from the state.

“This is an urgent national need, and we must do all we can to maximize the potential supply of homes and businesses across the country,” he said.

Berkowitz said that following a second meeting at the Knesset scheduled for Wednesday, the proposal will likely be ratified into law in the coming weeks.

Last year, the young deputy mayor was instrumental in demanding greater fiscal accountability among owners of the country’s 47,000 uninhabited apartments.

In December, the Knesset Finance Committee approved a sweeping measure submitted by the interior minister to double property taxes on the “ghost apartments,” or secondary residences that owners utilize for a fraction of the year.

The problematic phenomenon, typically propagated by wealthy Diaspora Jews, has markedly reduced the capital’s housing supply, resulting in underpopulated neighborhoods, stalled housing and nominal economic growth.

Berkowitz estimates that the capital has roughly 10,000 ghost apartments, which has stymied the market and dramatically increased rental costs for young residents hoping to raise families in the city.

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