Arnona (Municipal Property Tax) in Israel: A Complete Guide for Foreign and Non-Resident Property Owners

Every foreign buyer who closes on an Israeli apartment walks away knowing about purchase tax and capital gains tax. Arnona gets far less attention, because conveyancing lawyers focus on the one-time transfer costs rather than ongoing holding costs. Yet for a non-resident keeping a Tel Aviv apartment for personal or family use, five years of arnona easily tops NIS 30,000, and the non-resident discount that could trim that bill by a third goes unclaimed more often than it should.

This guide covers the complete arnona picture for foreign property owners: how the tax is calculated, which rate applies in your situation, how to claim the non-resident discount, what municipalities can do if you fall behind, and how to clear the slate when you sell.

1. What Is Arnona and How Is It Calculated?

Arnona is Israel's version of a municipal rates charge — not a national tax but a local authority levy paid to the city or regional council in whose area the property sits. The legal foundation is Section 330 of the Municipalities Ordinance [New Version] 5724-1964 (applicable to cities) and parallel provisions of the Local Councils Ordinance and Regional Councils Ordinance for smaller settlements. Each local authority sets its own rate schedule each year, subject to approval by the Ministry of Interior (Misrad HaPnim), and publishes the tariffs in the official gazette (Yalkut Pirsumim) at the start of the calendar year.

The formula is:

Annual arnona = floor area (sqm) × zone rate (NIS per sqm per year) × property-use multiplier

Each municipality divides its territory into rating zones (central, intermediate, peripheral) and sets a higher rate for more central zones. A residential apartment in central Tel Aviv (Zone 1) pays a materially higher per-sqm rate than an equivalent apartment in an outer neighbourhood (Zone 4 or 5). Commercial property rates are set separately from residential and are generally higher. The property-use multiplier handles specific circumstances, including the non-resident vacation-home classification covered in section 3.

Arnona is billed annually or in two or three instalments, depending on the municipality. Tel Aviv-Yafo, Jerusalem, and Haifa all allow bi-annual payment. Most foreign owners pay the annual lump sum in January or February rather than risk missing instalment deadlines from abroad. Some municipalities offer a small early-payment discount, typically 2–3%, for settling the full year at once.

2. Who Pays Arnona — Tenant or Property Owner?

The starting point under Israeli law is that arnona is charged against whoever holds the right to use the property. In a tenanted property, that is the tenant. In an owner-occupied or vacant property, that is the registered owner.

For foreign property owners this plays out in four typical scenarios:

• If the apartment is rented under a lease, the tenant pays arnona directly to the municipality. Most Israeli leases say so explicitly, and the municipality bills the tenant at the residential rate. You carry no arnona liability during an occupied tenancy, but you do have an interest in confirming that your tenant is actually paying, because unpaid arnona ultimately follows the property.
• If the apartment is vacant, you pay as the owner. The municipality applies the non-resident vacation-home rate if you filed the annual declaration. If you did not, you pay the standard Israeli-resident rate, which runs 30–40% higher for comparable properties.
• If family members or friends use the apartment rent-free, the municipality treats it as owner-occupied. The non-resident discount can still apply provided no commercial rental income changes hands.
• If the apartment is partly rented during the year and partly vacant, some municipalities will pro-rate the calculation, but only if you file a formal change-of-status notice with the arnona department (including start and end dates of the tenancy). Without the notice, the municipality applies whatever rate was last on file for the entire year.

3. The Non-Resident Discount for Foreign Property Owners

A foreign national who uses an Israeli apartment as a vacation home draws on municipal services only a few months a year and pays income tax somewhere else. Most municipalities recognise this by offering a reduced arnona rate for the category.

The authority to grant the discount comes from the Business Tax and Government Fees Law 5761-2000 and related ministerial regulations. The exact percentage varies by city:

• Tel Aviv-Yafo grants non-Israeli residents who use the apartment as a vacation home (not rented) a rate reduction of approximately one-third off the standard residential rate. In practice you pay roughly 67% of what an Israeli resident in the same zone pays. A Zone 2 apartment of 90 sqm running approximately NIS 100 per sqm would cost around NIS 9,000 per year at the full rate, or roughly NIS 6,000 after the non-resident reduction. The discount applies to the whole year provided you filed before the municipality's annual deadline, typically end of March.
• Jerusalem offers a comparable reduction for non-resident foreign owners in the vacation-home category, assessed case by case but running at a similar level to Tel Aviv in practice. The arnona department (machleket haarnona) on 02-629-5959 can confirm the rate for your specific address.
• Haifa, Netanya, Herzliya, Raanana, and most other cities each publish their own non-resident rate, usually in the 25–35% reduction range. Some development towns go higher to encourage part-year foreign occupation.

Three conditions apply across all municipalities:

1. The applicant is not a permanent Israeli resident and is not exercising Israeli citizenship through permanent residence in Israel.
2. The property is not rented out commercially. No rental income is being received. A property used for Airbnb or any other short-term commercial rental does not qualify.
3. The applicant submits a fresh annual declaration with supporting documents before the municipality's deadline for the relevant tax year.

4. Applying for the Non-Resident Discount: Step by Step

The discount requires an active annual application. The process works the same way across all major cities, though forms and deadlines differ slightly by municipality.

Step 1: Obtain the correct form. Each municipality has a declaration form for non-resident vacation-home owners. In Tel Aviv, file through the raashot online portal at tel-aviv.gov.il or in person at the Arnona Department (Ibn Gabirol Street, Tel Aviv). Jerusalem's form is on the municipality's resident portal at jerusalem.muni.il. Most cities now take the application by email.

Step 2: Gather the required documents. Most municipalities ask for:

• Copy of your foreign passport (full copy, not just the photo page)
• Proof that you are not an Israeli resident: typically a foreign national identity document or home-country residence permit, or a signed declaration that you are not registered as a permanent resident in Israel
• A copy of your property ownership certificate (nessach Tabu, a Land Registry extract) confirming you are the registered owner; available from the Land Registry portal at iaa.justice.gov.il
• A signed declaration that the property is not rented out and that you receive no rental income during the tax year
• If you manage the property through a power of attorney, a copy of the notarised and apostilled POA appointing your Israeli representative

Step 3: Submit before the annual deadline. Most municipalities set the deadline at 31 March for that calendar year's arnona. Late applications may be accepted at the municipality's discretion but are not guaranteed retroactive credit for the January–March period. Non-residents managing from abroad should aim to submit in early January so the discount is processed before the first instalment falls due.

Step 4: Receive confirmation and an adjusted invoice. The municipality will issue a revised arnona invoice at the reduced rate. Keep this on file. If the property's status changes (you start renting it out, or you move to Israel), notify the municipality immediately. A discount that continues in place after the qualifying circumstances end creates a retroactive arnona liability with interest.

5. Arnona Rates in Major Israeli Cities (2026)

The following ranges are for standard residential apartments in the central zones of each city, before any discount. Non-resident owners using the property as a vacation home should apply the municipality's reduction percentage to these figures to estimate their bill. All amounts are per square metre per year and are approximate; verify the precise rate for your zone with the municipality before budgeting.

• Tel Aviv-Yafo: NIS 55–175 per sqm/year (Zone 5 outer to Zone 1 central). An 80 sqm apartment in Zone 2 (much of central Tel Aviv) runs approximately NIS 8,000–9,600 per year before discount, or roughly NIS 5,400–6,400 after a one-third non-resident reduction.
• Jerusalem: NIS 40–130 per sqm/year. An 85 sqm apartment in central Jerusalem runs approximately NIS 5,100–7,000 per year before discount.
• Haifa: NIS 35–95 per sqm/year. An 80 sqm apartment in the Carmel district runs approximately NIS 4,000–5,500 per year before discount.
• Herzliya Pituah and Raanana: NIS 50–120 per sqm/year. Popular with American and European buyers, these cities assess arnona at rates comparable to Tel Aviv's middle zones.
• Netanya: NIS 30–80 per sqm/year. A favourite with French-speaking buyers, Netanya's arnona is among the more affordable in the coastal cities.
• Be'er Sheva, Ashdod, Ashkelon: NIS 20–55 per sqm/year. Development towns and southern cities carry the lowest residential rates.

These rates typically increase each year in line with or slightly above the Consumer Price Index (madad hamahhirim). The rate increase for 2026 in most major cities was between 3% and 5%.

6. Discounts That Foreign Owners Generally Do Not Qualify For

Israel's municipalities offer a range of arnona reductions, but most require Israeli residency or specific social circumstances that foreign nationals cannot satisfy. Knowing what is off the table saves time:

• The senior citizen discount is available to Israeli residents aged 75 and above with limited income. It requires Bituach Leumi registration and proof of Israeli residency.
• The disability discount requires a Bituach Leumi disability classification and Israeli residency.
• The low-income discount is available to Israeli residents below the annual income threshold set by the Ministry of Interior. Not available to non-residents.
• The new-immigrant discount (oleh chadash) covers the first 12 months after aliyah, administered through the Ministry of Aliyah and Integration (Misrad HaKlita). It only applies after you have permanently moved to Israel and registered with the Population and Immigration Authority. Visiting or maintaining a vacation home does not qualify.
• There is no arnona discount tied to the Section 122 rental income tax exemption under the Income Tax Ordinance. How your rental income is taxed has no bearing on the arnona rate.

7. Non-Payment: Debt, Liens, and Enforcement

Arnona arrears do not sit quietly. Israeli municipalities have clear statutory authority to collect, and the tools available are ones that matter to property owners.

Interest and CPI linkage. Unpaid arnona accrues interest at 4% per annum plus CPI linkage (hatzmadat madad) from the original due date. On a NIS 8,000 annual bill left unpaid for three years, with 3.5% average annual CPI, the total liability can reach NIS 11,500 before enforcement costs are added.

Property lien. Under the Municipalities Ordinance, a municipality can register a charge (achrayut) against the property in the Land Registry (Tabu) for unpaid arnona. The lien appears on the title extract and blocks any sale, mortgage refinancing, or further charge until the debt is paid. Buyers' lawyers requisition a clear arnona certificate as a closing condition, so a lien found during due diligence either kills the deal or gets deducted from the seller's proceeds before title transfers.

Execution Office referral. Municipalities can refer persistent non-payers to the Execution Office (Lishkat HaHotzaa LaPoal) for enforcement against Israeli bank accounts, wages, or other assets. The Execution Office has fewer tools against a purely non-resident owner with no Israeli income or bank account, but the lien on the property stays effective regardless of where the owner lives.

Administrative offence. Deliberate and systematic non-payment can, in extreme cases, be pursued as an administrative offence. This is rare for private residential property but has been used against commercial owners with large multi-year arrears.

8. Clearing Arnona Arrears When You Sell

When you sell an Israeli property, your conveyancing attorney (oreih din b'inyanei mekarkein) will require a municipal clearance certificate (ishur raashot) confirming that all arnona, water, and sewage accounts are fully paid up to the handover date. Without this certificate, the Land Registry (Tabu) will not process the transfer of title to the buyer.

Obtaining the clearance takes time — typically two to four weeks from the application date. For non-resident sellers managing from abroad, that timeline matters. Your Israeli attorney should apply for the clearance as soon as the price is agreed and the deal is in final negotiation, not on closing day.

If the clearance search turns up arrears, the municipality will produce a payoff figure the seller must clear before the certificate issues. Where there is a dispute about the amount (for example, if the non-resident discount was not applied correctly in a prior year), the arnona department has a review process, but the dispute does not suspend the collection obligation. You pay first and challenge the calculation afterward.

Foreign sellers sometimes discover at this stage that a property manager or tenant failed to pay arnona as agreed. The municipality does not care about the underlying agreement; you are the owner and you owe the debt. Check the arnona account status before listing the property for sale, not after signing a purchase agreement.

Frequently Asked Questions