You may be able to rent out your property in Israel while living in Israel or abroad, subject to your ownership or lease rights, permitted use, building restrictions and the proposed rental operation. Do not assume every property may lawfully be let in every way.
When you earn income from renting out your apartment, that income is taxable in Israel. However, the Israeli Tax Authority provides several different tax “tracks,” or options, for residential landlords, and you can choose the one that is most beneficial for you.
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The Exemption Track: Qualifying non-business residential rental income of an individual may receive full or partial exemption under statutory conditions. The ₪5,654 monthly ceiling is frozen through 2027. Apply the required household and rental-income aggregation rules; the number of apartments alone does not determine eligibility. Above the ceiling, the partial-exemption formula can reduce the exempt amount. Exempt income does not establish that no tax return or other report is required in every case.
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The 10% Track: A qualifying individual may elect the section 122 route for non-business income from renting an Israeli dwelling for residential use. Exceeding the exemption ceiling is not a prerequisite. The basic tax is 10% of gross rent, without the ordinary expense deductions, credits and exemptions for that income. Check any specific statutory relief, including the separate conditions for a qualifying landlord who rents another home, and the payment deadline with an accountant.
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The Ordinary Income Tax Track: Tax is calculated under the applicable ordinary-income rules, with deductions and depreciation only where legally allowed. Passive rent is not automatically business income, and not every cost is deductible. Age, other income, business classification, allowable costs and surtax can affect the result. Multiple properties or high rent do not automatically make this the cheapest route.
You should consult with an Israeli accountant to determine which track is the most financially sound for your specific situation, as the figures and rules can change.
Calculate the exemption before comparing the rates. Our residential rental-income tax guide explains the monthly taper, household aggregation, sole-home rent-paid relief and revised 2026 ordinary bands, with worked examples and source limits.
The Three Rental Income Tax Tracks Compared
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Confirm that the proposed letting is permitted, then assess the applicable Israeli tax obligations.
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There are several tax options, including a tax-exempt track if your monthly rent is below the exemption ceiling (about 5,654 NIS in 2025, frozen through 2027).
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The qualifying 10% route is not limited to income above the exemption ceiling. Compare it with the ordinary route using only legally allowable deductions and any applicable special relief.
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It’s best to consult an accountant to choose the most beneficial tax track for you.
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