Quick Answer: Arnona is Israel's municipal property tax, levied by each city or local authority on every property — residential, commercial, and vacant. It is charged per square metre per year at rates that vary significantly between municipalities. If you own a residential apartment in Israel but live abroad and leave it vacant, most municipalities charge you a surcharge of up to 100% above the standard rate. New olim receive substantial reductions for the first two years. Arnona is not collected by the national tax authority — each municipality handles it directly.

Ask most foreigners who own property in Israel what they pay in ongoing costs, and they will mention betterment tax, purchase tax, and perhaps income tax on rental income. Arnona is the tax that tends to catch people off guard: an annual municipal levy that arrives every quarter as a bill in Hebrew, calculated on a formula that differs from city to city, and carrying serious consequences if ignored.

For diaspora families who inherited Israeli apartments, for non-resident investors, and for new immigrants settling in Israel, understanding how arnona works is a practical necessity. This guide explains the legal framework, how rates are set, the non-resident surcharge for empty apartments, the exemptions available to qualifying owners, and how to manage the whole thing from outside Israel.

1. What Is Arnona?

Arnona is a municipal property tax levied by Israeli local authorities — cities, local councils, and regional councils — on all properties within their jurisdiction. It is the single largest source of self-generated revenue for most Israeli municipalities and funds local services including schools, roads, parks, sanitation, and the fire service.

The legal basis for arnona is the Local Authorities (Rates and Water) Ordinance [New Version] and the related Local Authorities (Property Tax and Payment for Services) Law 5738-1938 (in its updated version), together with each municipality's own bylaws which set the specific rates for that city. Rates must be approved annually by the Ministry of Interior within a permitted range, and municipalities must publish their rate tables publicly.

Arnona applies to:

  • All residential apartments — whether occupied by the owner, by a tenant, or vacant
  • All commercial premises — offices, shops, warehouses, hotels, and industrial facilities
  • All other structures including parking lots, storage units, and agricultural buildings

Land alone (without a structure) is generally not subject to arnona unless the local authority has designated it as a chargeable surface. Undeveloped lots in some municipalities are subject to a separate levy , but this is distinct from arnona.

2. Owner or Tenant — Who Pays?

This is one of the most commonly misunderstood aspects of arnona, particularly for foreign owners who rent out their apartments.

Under Israeli law, the obligation to pay arnona falls on the person in possession of the property — the occupier — not necessarily the registered owner. In practice this means:

  • If you live in the apartment yourself (owner-occupier): you pay arnona directly to the municipality
  • If you have a tenant: the tenant is legally responsible for arnona during the tenancy period. In practice, most Israeli lease agreements explicitly confirm this — the tenant pays arnona directly to the municipality and produces receipts if required by the landlord
  • If the apartment is vacant: no occupier exists, so the owner bears the arnona liability. The municipality will send bills to the registered owner or their known address

What happens when a tenant doesn't pay? The municipality's primary recourse is against the occupier. However, if a property is vacated with arrears outstanding, municipalities can and do pursue the registered owner for amounts owed during periods of unclear occupancy. When managing an Israeli property from abroad, ensure your lease agreement clearly specifies the tenant's arnona obligations and that you receive copies of payment confirmations or that your property manager checks compliance.

3. How Arnona Is Calculated

Arnona is calculated using a straightforward formula, but the rates that go into it vary enormously from one municipality to another:

Annual Arnona = Property area (m²) × Annual rate (NIS per m²)

The annual rate per square metre depends on three factors:

  1. Property type / usage code : Each municipality classifies properties into categories — residential, commercial, industrial, agricultural, etc. Residential apartments carry the lowest rates; offices and commercial premises carry higher rates; industrial warehouses vary
  2. Geographic zone within the municipality: Most cities divide their territory into zones (typically Zones A, B, C, and so on), with central, high-value neighbourhoods in Zone A carrying higher rates than peripheral areas
  3. The municipality itself: Tel Aviv rates are substantially higher than rates in peripheral towns. Central cities and affluent suburbs charge more than development towns or regional councils

To give a sense of scale: in Tel Aviv, the residential arnona rate in a central zone runs at approximately NIS 100–130 per square metre per year (as of recent rates — verify current figures with the Tel Aviv municipality). A 90 m² apartment in a central Tel Aviv zone would therefore carry annual arnona of roughly NIS 9,000–11,700 (approximately USD 2,500–3,200). In a smaller city like Be'er Sheva or Nazareth, the same-size apartment might carry NIS 3,000–5,000 per year.

The property area used in the calculation is the area recorded in the municipality's property registry, not necessarily the area in the Land Registry or in the purchase agreement. If you believe the recorded area is incorrect, you can apply to the municipality to have it corrected — this sometimes results in a reduction.

Arnona is typically billed in quarterly instalments, though some municipalities offer monthly or bi-annual billing. New owners receive a bill addressed to them once the municipality is notified of the ownership transfer; until then, bills may continue going to the previous owner. Notify the municipality promptly after any property purchase.

4. Non-Resident Surcharge for Vacant Apartments

This is the arnona rule that most surprises foreign property owners: if you own a residential apartment in Israel, live abroad, and leave the apartment vacant (not occupied by a tenant, family member, or caretaker), most Israeli municipalities are entitled to charge you an elevated arnona rate.

The authority for this surcharge derives from regulations under the Local Authorities Law that permit municipalities to charge a higher rate for apartments that are empty and owned by non-residents. The rate uplift varies by municipality but commonly runs at 100% above the standard residential rate — effectively doubling the arnona bill. Some municipalities apply a lower surcharge; a few apply no surcharge at all for initial periods. The details are set in each municipality's annual arnona order.

Who is a "non-resident" for arnona purposes? The definition varies somewhat by municipality, but it typically covers owners whose centre of life is not in Israel — meaning they do not live in Israel as their primary place of residence. This catches most diaspora owners, foreign investors, and Israelis who have emigrated. It does not apply to Israelis who are temporarily abroad for work or study.

How municipalities discover vacancy: Municipalities cross-reference arnona registrations with water and electricity consumption data. An apartment with zero or minimal utility consumption is flagged as likely vacant. The municipality may then conduct a field inspection or send a questionnaire asking the owner to confirm occupancy status. Failure to respond can result in the surcharge being applied retroactively.

Avoiding the surcharge: The two main routes are tenanting the apartment, in which case the occupying tenant pays standard arnona and the surcharge does not apply, or demonstrating to the municipality that the apartment is not truly vacant because it is used by a family member residing in Israel. Each municipality has its own procedure for applying for and contesting the surcharge — your Israeli attorney or property manager can handle this on your behalf.

In Practice: Municipalities catch non-resident vacancy through utility data cross-referencing — an apartment with near-zero water or electricity consumption is flagged automatically. When the municipality then sends a questionnaire to the registered owner's address, it goes to an apartment the owner is not living in and sits unopened. The surcharge is then applied retroactively to the point vacancy was detected. Non-residents should register an Israeli attorney or property manager as their correspondence address with the municipality's arnona department to avoid this trap.

5. Exemptions and Reductions

Israeli law and municipal bylaws provide a range of exemptions and reductions that can significantly cut arnona bills. The key categories relevant to foreign nationals and new immigrants are:

New immigrants (olim)

New olim are entitled to a reduction in arnona on their primary Israeli residence. The standard national framework provides:

  • A reduction of up to 90% on the arnona bill for the first year following arrival
  • A reduction of up to 75% in the second year
  • These reductions apply to the primary residence only and are subject to a maximum property size; larger apartments are reduced only up to the cap
  • The reduction must be actively applied for at the local municipality with a copy of the oleh certificate (*teudat oleh*); it is not applied automatically

Returning residents (*toshavim chozrim*) and those making aliyah for the second time may have different entitlements; confirm with the municipality.

Senior citizens ( / )

Property owners or occupiers over the age of 65 with income below a nationally set threshold receive a reduction of approximately 25–66% on their arnona bill, depending on their income level. The income threshold and exact discount percentages are set annually by the Ministry of Interior. Application is made at the local municipality with proof of age and income.

Persons with disabilities

Recognised disability holders may receive reductions ranging from 25% to 100% depending on the percentage of recognised disability. Full exemptions are available to those with a recognised disability of 90% or more. Applications are made at the municipality with official disability certificates.

IDF soldiers and bereaved families

Active IDF soldiers receive significant reductions or full exemptions on their primary residence. Bereaved families of soldiers receive full arnona exemptions. These provisions are set nationally.

Single-parent families and low-income households

Means-tested reductions exist for qualifying single-parent families and households below the income poverty line. Each municipality administers its own version within national guidelines.

Newly built apartments (temporary exemption)

New construction that has not yet been occupied — for example, an off-plan apartment delivered to the buyer but not yet connected to utilities — may qualify for a temporary arnona exemption during the initial period. The rules vary and must be confirmed with the municipality.

How to apply: All exemptions and reductions must be applied for proactively. The municipality does not apply them automatically. Applications are submitted directly to the local authority's arnona department with supporting documents — typically translated or certified if they originate abroad. Reductions are generally not backdated beyond the application date, so apply as soon as you become eligible.

6. How to Pay Arnona From Abroad

Managing arnona from outside Israel is a practical challenge that many foreign owners navigate successfully with the right setup.

Setting up a direct debit : The simplest solution for non-residents is to authorise direct debit payments from an Israeli bank account. Most Israeli banks allow this, and the municipality will debit the account each quarter. This requires an active Israeli bank account and ensuring sufficient funds are available in it. If you don't have an Israeli bank account, opening one before or shortly after purchasing property is strongly advisable for this reason among others.

Online payment portals: Major Israeli municipalities — Tel Aviv, Jerusalem, Haifa, Rishon LeZion, Petah Tikva, and others — have online payment portals that accept international credit cards. The portals are primarily in Hebrew, though some have partial English interfaces. Your arnona bill will contain an account number and payment reference which you enter into the portal. Many foreign owners use Google Translate or rely on a property manager to navigate these portals.

Property manager: If you have engaged a property management company for your Israeli apartment, they typically handle arnona as part of their service — receiving bills, paying from the managed account, and reporting to you. This is the lowest-friction option and is strongly recommended for non-resident owners who do not have family in Israel to assist.

Power of attorney: For more complex arnona matters — appealing a rate, applying for an exemption, contesting arrears — you can grant a power of attorney to your Israeli attorney or property manager to deal with the municipality on your behalf. The power of attorney must be notarised and, if signed outside Israel, apostilled.

Address for correspondence: Keep the municipality's arnona department informed of your mailing address abroad. Bills sent to an apartment you are not living in will go unread, and non-receipt of a bill is generally not a defence against arrears. Many municipalities allow you to register an email address for digital billing, which is far more reliable for non-residents.

7. Consequences of Non-Payment

Municipalities treat arnona arrears seriously and have strong legal tools to collect them. Unlike national taxes (which the Tax Authority collects through court proceedings), municipalities can enforce arnona collection under the Tax Collection Ordinance , which gives them powers similar to those of a preferred creditor.

What happens when arnona is unpaid:

  • Interest and linkage charges : Unpaid arnona accrues interest and inflation linkage from the date it falls due. The rate is set by regulation and compounds over time, meaning that a bill ignored for several years can grow substantially
  • Warning letter : The municipality sends formal warning letters demanding payment within a specified period
  • Bank account garnishment: Under the Tax Collection Ordinance, the municipality can issue a direct attachment order on bank accounts held in Israel. This does not require a court judgment; the municipality acts administratively. Israeli bank accounts of non-residents can be reached this way if the account is known
  • Property lien : Prolonged arnona arrears can result in a lien being registered against the property itself at the Land Registry. This lien must be cleared before the property can be sold or mortgaged, effectively blocking any future transaction
  • Debt passed to Execution Office: In serious cases, municipalities can transfer the debt to the Israeli Execution and Collection Authority for enforcement, which can then attach assets, restrict driver's licences, and impose travel bans on debtor-owners who are resident in Israel

Dealing with inherited arrears: Buyers of Israeli property sometimes discover after purchase that the previous owner left arnona arrears. Under Israeli law, arnona obligations generally follow the property — the municipality can pursue the current registered owner for arrears from prior periods. Due diligence before any property purchase should include requesting a clearance certificate from the relevant municipality confirming that there are no outstanding arnona or other municipal debts on the property. For more on pre-purchase checks, see our guide on Due Diligence on Israeli Property.

In Practice: Inherited arnona arrears are one of the most common surprises in Israeli estate transactions. An apartment that belonged to a parent or grandparent for 20 years may carry five or more years of unpaid arnona plus accumulated interest and inflation linkage — sometimes NIS 50,000 or more. The municipality will not volunteer this information; heirs must proactively request an account statement from the arnona department before agreeing to any distribution of the estate or sale of the property. The clearance certificate must be obtained before closing, not after.

8. Arnona on Commercial Property

Foreign nationals and investors who own commercial property in Israel — offices, retail units, warehouses — face arnona rates that are materially higher than residential rates. Commercial arnona is calculated on the same per-square-metre basis, but the rates per metre are typically three to ten times higher than residential rates in the same area, reflecting the higher revenue-generating capacity of commercial space.

Several additional points apply to commercial arnona:

  • VAT: Unlike residential arnona (which is exempt from VAT), arnona charged on commercial property is subject to VAT at the standard rate. This makes commercial arnona a more complex item in any accounting
  • Deductibility: Commercial arnona is generally deductible as a business expense for Israeli income tax purposes, reducing the effective cost relative to the gross amount billed
  • Usage-code disputes: Commercial tenants and owners sometimes dispute the usage code applied to their premises — for example, whether a creative studio is classified as an office or as an industrial unit. The classification can make a significant difference to the arnona rate, and appeals to the municipality's appeals committee are possible
  • Shared spaces: In commercial buildings, arnona for shared areas (lobbies, corridors, car parks) is often allocated among tenants proportionally; the method of allocation should be specified in the lease agreement

An American investor came to me after receiving a Tel Aviv municipality notice demanding NIS 38,400 in back-arnona covering three years, based on the 100% non-resident vacancy surcharge applied retroactively from the date his apartment's water meter had registered zero consumption. He had not applied for the vacancy reduction within the required 30-day window, and the municipality had therefore continued billing at the standard rate plus the 100% surcharge. Because the apartment had genuinely been vacant and he held a lease agreement showing no tenant, we appealed to the Tel Aviv municipality's arnona appeals committee under the Municipal Law 5718-1958 — the committee has discretion to reduce or waive retroactive surcharges where vacancy is proven. After submitting utility records and a sworn statement, the committee reduced the outstanding amount to NIS 9,200 — the standard arnona only — and waived the surcharge. Non-resident owners must register an Israeli contact address with the municipality's arnona department so that notices reach someone who can act on them.