Israel: Multi-Asset Taxation

Last Updated: 13 April 2017
Article by Tsippy Bengi

On September 15, 2016 the Ministers Comity for legislative amendments approved the bill proposal, according which as of January 2017, a tax will be levied on holders of three or more apartments, at a rate of 1% of the value of the apartment, as from the third apartment, provided however that the tax amount shall not exceed 1,500 NIS per month (18,000 NIS on an annualized basis), and all that subject to additional conditions, which will be determined by regulations. The proposed bill is supposed to be brought for final vote in the Knesset on November this year.

In the explanatory notes to the bill it was asserted that the decision to impose the tax arise from two major considerations: the first, reducing the inequality between populations; and the second, imposing tax will lead to selling apartments (in order to avoid paying the tax) which will increase the supply of apartments and thus reducing the price of apartments.

Background and the purpose of the amendment

On September 15, 2016 the Ministers Comity for legislative amendments approved the bill proposal, according which as of January 2017, a tax will be levied on holders of three or more apartments, at a rate of 1% of the value of the apartment, as from the third apartment, provided however that the tax amount shall not exceed 1,500 NIS per month (18,000 NIS on an annualized basis), and all that subject to additional conditions, which will be determined by regulations. The proposed bill is supposed to be brought for final vote in the Knesset on November this year.

In the explanatory notes1 to the bill it was asserted that the decision to impose tax arise from two major considerations: the first, reducing the inequality between populations; and the second, imposing tax will lead to selling apartments (in order to avoid paying the tax) and increasing the supply of apartments thus reducing the price of apartments.

The sharp rise in prices of apartments as aforementioned increased, according to the explanatory notes, the gaps between the various population strata in Israel. According to data published in the explanatory notes it appears that the rate of household residing in an apartment owned by them among the second decile stands on 54% compared to 80% among the ninth decile. It was further asserted that according to the data taken from the Tax Authority, the average income per household owning three or more apartments amount to 3 times the average income of a household in Israel.

Furthermore, the second consideration behind imposing the tax is that the taxation may lead the house owners to sell the apartments in order to avoid the tax payment and thus increase the supply of apartments, which may lead to reducing the apartment prices.

It was further asserted that the move may lead to an increase of approximately 800 million NIS per year in the State revenue.

The basic principles of the bill

Levying tax on multi-asset holding as follows:

  1. As of 1 January 2017, annual tax will be imposed on apartment proprietors holding three or more apartments, on each of the apartments, starting from the third apartment.
  2. The tax rate, which will be levied on each one of the apartments pursuant to clause 1, will be 1% of the amount that will be determined in a table to be published by December 31, 2016 times the number of square meters as has been set in levying of the municipal tax re each apartment, provided that the said amount shall not exceed 1,500NIS per month.
  3. The amount that will be determined, relating to the tax level that will be imposed under clause 2 will rely on approximate value of residence square meter for each zone. The approximate residence square meter value calculation in each zone will be made according to the country's division into various zones, including by using the statistic zone table of the Central Bureau of Statistics
  4. An apartment owner is entitled to choose which of the apartments in his ownership will be deemed as the third apartment and upwards; if the apartment owner did not select as aforementioned, the tax will be imposed on the cheapest apartments among the apartments he owns, pursuant to the information kept by the Tax Authority.

According to the main principles of the bill and the explanatory notes, it appears that there is no significance how the proprietor has obtained ownership of the three apartments, in other words: the tax will be levied on anyone holding three or more apartments. Thus, there is no distinction between a holder, who inherited the apartment, a holder that does not rent out the apartment or classical real estate investors.

As stated in clauses 2-3 of the basic principles of the bill, the tax rate will be levied based upon the number of meters multiplied by the value per meter. The value per meter will be published on 31.12.2016. That is to say, one day prior to the bill taking effect. Therefore, and since the apartment holders have no way of knowing, at this stage, from which value the tax will be derived, they are unable to assess whether or not they should sell the third apartment they own.

Further re the value, it should be noted that the value per meter will be determined pursuant to the county's division to zones, when the peripheral coefficient and a socio-economic index will be taken into consideration (data published at the CBS), regardless of the size of the apartment or its nature. Thus, for example, the value per meter of a 3-room apartment will be equal to the value per meter of a penthouse apartment in the same area.

Advantages and Disadvantages

As stated above, the move of imposing tax on holders of three or more apartments is supposed to lead to the reduction of the gaps between the population strata and in addition assist in reducing the price of apartment. There is no dispute that both objectives, if attained, are appropriate objectives that are supposed to assist mainly the weak sections of the populations and the middle class in purchasing an apartment.

Alongside the appropriate objective of the bill, the bill, in its present form, raises a number of question whether it may achieve those objectives.

It would be interesting to see how the implementation of the bill affects the rental market in the country (Israel), which has also been enjoying a considerable rise in prices in recent years.

It may be said with rather high probability that not all apartment holders will choose to sell their third or additional apartments in order to avoid paying the tax due to several reasons: one, the tax rate and the ceiling that has been set, 1,500 NIS per month, is not high enough to constitute an incentive for selling an apartment. One should keep in mind that one of the central reasons that there are about 50,000 apartment owners holding three or more apartments arises from a low interest environment, when in addition to the low interest rates on the mortgage, the alternative of other investments that have been common in the past, such as depositing money in the bank, are not attractive.

According to the CBS data and as was specified in the explanatory notes of the bill, most of the people who do not own an apartment belong to the lowest deciles. In other words, the weak sections of the population rent apartments and do not buy apartments. It is very possible that a person holding three or more apartments will choose not to sell the third apartment, the cheap one, but rather raise the rent charged so in fact will roll the tax onto the renters.

Thus, ultimately, the move may actually worsen the situation of the weak sections of the population. Should the apartment holders not choose to sell the apartments for the reasons stated above, or due to other reasons, then the supply of apartments will not increase in the secondary market and this may not lead to the reduction in the housing prices. Beyond that, it is likely that the apartment holder will raise the rent charged in order to role the tax onto the renters.


There is no doubt that the purposes apparently underlying the bill are appropriate, and if achieved, would be a blessing that may relieve us all. Nevertheless, it is very doubtful whether the implementation of the bill will lead to achieving the objectives and purposes or rather, it may lead to the opposite result, which will worsen the situation of the weak sections of the population and of the middle class, which is crying out for an apartment in the country.


1 Multi Asset Taxation regulation 7688-2016, 2 August, 2016

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.