This is a critical financial question that many homeowners in Israel face during a major renovation. The simple answer is yes, you are generally liable for arnona (municipal tax) payments. However, under specific circumstances, you can apply for a temporary exemption. Navigating this process correctly can save you a significant amount of money.
Arnona is a tax levied on the user of a property, not the property itself. The default position of the municipality (iriya) is that as the owner, you are the user, and the tax is due. Simply remodeling is not sufficient grounds for an automatic exemption. To qualify for a potential exemption, the property must be completely uninhabitable. This means it must be an empty shell, with no functioning kitchen, bathroom, or electricity, and essentially be a construction site.
To obtain the exemption, you must formally apply to your local municipality’s arnona department. You will need to submit an application form along with evidence proving the property’s condition. This evidence typically includes photos of the empty, gutted property, copies of your construction permits, and a letter from your architect or contractor stating the scope of the work and the expected timeline. If approved, the municipality can grant an exemption for a one-time period of up to six months. This exemption is a “one-time per life of the asset” deal, meaning you can only claim it once for that property. It is crucial to apply for this exemption before you start the demolition, as it cannot be applied retroactively.
Too Long; Didn’t Read
- Yes, you are normally liable for arnona even during remodeling.
- You can apply for a temporary exemption if the property is completely uninhabitable (an empty shell).
- You must formally apply to the municipality with proof (photos, permits) to get the exemption.
- The exemption is typically for a maximum of six months and can only be granted once for the property.
- Apply before the renovation begins.
