New Standard Could Alter Apartment Sizes for Property Tax Calculations

A new standard approved by the Israel Land Appraisers Association aims to unify how apartment sizes are measured, potentially impacting property tax (arnona) bills across the country. The standard, known as 9.1, defines apartment area to include internal walls and half of shared external walls, while excluding laundry rooms and including attics only if they are at least 1.80 meters high. Common building areas remain outside the apartment's calculation.

While the standard is now in effect for property appraisals, its application to arnona calculations is not immediate. Current arnona bills are based on local municipal rules, and changing these measurement methods is restricted. However, the Ministry of Interior's involvement in developing the standard and the stated intention for a future unified definition suggest a significant financial discussion is on the horizon.

The impact of adopting standard 9.1 for arnona purposes will vary by city. In cities like Ramat Gan and Jerusalem, where current measurements are based on internal area or exclude wall thickness, incorporating walls into the calculation could increase the taxable area and thus the arnona bill. Conversely, municipalities with broader measurement methods that already include walls or parts of common areas might see their taxable base decrease under the new standard.

This divergence means that a nationwide adoption of a uniform standard could lead to some households paying more arnona while others pay less, independent of any changes to the per-square-meter tax rate. For example, an increase of six square meters in taxable area on a 100-square-meter apartment with a rate of 70 shekels per square meter would raise the annual bill by 420 shekels.

The change could also affect eligibility for arnona discounts, as some concessions are tiered based on apartment size. Furthermore, in urban renewal projects, residents moving to larger, newly built apartments already face increased taxable areas, and the measurement standard adds another layer to the financial implications.