Tel Aviv to double municipal tax rate for Airbnb apartments

The increased rate is expected to apply to residents renting out their apartment in excess of three months per year, and is subject to approval by the city council.

North Tel Aviv  (photo credit: MARC ISRAEL SELLEM)
North Tel Aviv
(photo credit: MARC ISRAEL SELLEM)
Tel Aviv residents renting out properties on home-rental website Airbnb will soon be required to pay more than double the average municipal tax rate under new regulations announced on Monday.
“In recent years, the phenomenon of renting out residential apartments in Tel Aviv-Jaffa for short periods of time has been increasing,” the municipality said in a statement. “The rentals are primarily made through websites specializing in such rentals, such as Airbnb. In light of the sharp increase in the number of long-term commercially-rented apartments, resulting in damage to residents’ lifestyle and rental market housing prices, a uniform tariff of NIS 120.89 per square meter has been decided.”
The new rate for Airbnb and other vacation properties is more than double the proposed average rate for residential properties across the city: NIS 52.20 per square meter.
The increased rate is expected to apply to residents renting out their apartment in excess of three months per year, and is subject to approval by the city council on February 18.
More than 8,000 Tel Aviv apartments and rooms are currently offered on Airbnb, similar to the number of hotel and hostel rooms in the city.
“The new policy that we are advancing in the framework of the 2019 municipal tax order aims to regulate the growing number of properties that are becoming full-time vacation apartments, a trend which in the long term increases the cost of housing for young people and families, and the overall price of living in the city,” said Tel Aviv Mayor Ron Huldai.
In addition to the new rates for vacation properties, the proposed municipal tax rates also include a 5% discount for Tel Aviv residents serving as IDF reservists.
“Tel Aviv-Jaffa is the leading city in terms of the time served by its residents in reserve duty, and this is simply a symbolic thank you for their contribution.”
While the tax hike is expected to receive council approval, it is unlikely to enter into force immediately.
Sources told financial daily Calcalist earlier this month that the municipality will only implement the rate hike after Tel Aviv hosts the Eurovision Song Contest in May, when tens of thousands of tourists are expected to arrive in the city.
Airbnb properties have taken advantage of the shortage of accommodation for visitors in Tel Aviv and across Israel as the country has welcomed an almost 40% increase in tourism in the last two years, repeatedly breaking incoming visitor records in the process.
Seeking to match the growing demand, more than 7,500 hotel rooms were in the pipeline across the country at the end of 2018, including more than 3,700 rooms in Tel Aviv, according to data and analytics specialist STR. The city’s room occupancy rate stood at approximately 74% last year, higher than the national average of 70.4%.