Yes, you can absolutely rent out your property in Israel, whether you live abroad or in the country. The rental market is a core part of the real estate landscape, and for many foreign buyers, rental income is a key part of their investment strategy. The process is straightforward, but you must be aware of your obligations, especially when it comes to taxes.
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 Tax-Exempt Track: This is the most popular option for landlords with one or two properties. As of 2025, if your total monthly rental income is below the exemption ceiling (about 5,654 shekels in 2025; this ceiling is frozen through 2027), your rental income is completely tax-free and you generally don’t need to file a report for it. If your income is above this ceiling, a “declining” formula reduces the exempt amount (the more you exceed the limit, the smaller the exemption). This track is simple and highly advantageous for many small-scale investors.
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The 10% Flat Rate Track: If your rental income exceeds the tax-free ceiling, you can choose to pay a flat tax of 10% on your gross rental income. The big condition here is that you cannot deduct any expenses (like repairs, management fees, or property taxes) when you choose this track. You simply calculate 10% of the total rent you received and pay that to the tax authority. It’s simple and predictable.
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The Standard Income Tax Track: On this track, your rental income is treated like any other business income. It is added to your other income and taxed at your marginal income tax rate (which can be as high as roughly 50% at the top, including surtax). The major advantage here is that you can deduct all relevant expenses associated with the property—repairs, insurance, Arnona (municipal tax), depreciation, and interest on your mortgage. This is usually the best option for people who own multiple properties or have very high rental income.
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.
Too Long; Didn’t Read
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Yes, you can rent out your property. The rental income you earn is subject to Israeli taxes.
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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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For higher income, you can choose a simple 10% flat tax on gross rent or pay according to your standard income tax rate, which allows you to deduct expenses.
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It’s best to consult an accountant to choose the most beneficial tax track for you.
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