The Blog

Discover and understand the real estate market in Israel. Our team will guide you in buying, selling, and renting property for all intentions and purposes.

Our Insights on Israel's Real Estate Market | Blog | Immo Israel

Our Insights on Israel's Real Estate Market

Overview of the tax framework applicable to rental income in Israel, including available tax regimes, reporting obligations, and the distinction between residents and non-residents.

Taxation of Rental Income in Israel: Tax Regimes, Obligations and Legal Framework

Rental income derived from real estate located in Israel is subject to specific tax obligations. The taxation of rental income depends on several factors, including the nature of the rented property, the amount of rental income received, and the tax status of the property owner.

This article provides a general, structured, and institutional overview of the taxation applicable to rental income in Israel, the main tax regimes available, and the associated reporting obligations, without addressing individual situations or optimization strategies.

General principles of rental income taxation

Under Israeli tax law, rental income constitutes taxable income when it is generated from real estate located in Israel. This rule applies regardless of the property owner’s place of residence or nationality.

Rental income is generally taxed at the level of the property owner, whether an individual or, in certain cases, a legal entity, in accordance with the applicable tax legislation.

Israeli legislation provides several tax regimes applicable to rental income derived from residential property. The applicable regime depends mainly on the amount of rental income and, in certain cases, on the taxpayer’s election where the law allows such a choice.

Exemption-based regime (subject to a ceiling)

Rental income derived from residential property may, under certain conditions, benefit from a partial exemption, up to a monthly ceiling set by law and updated periodically.

When the rental income exceeds this ceiling, the exemption may be reduced or fully eliminated in accordance with statutory rules.

A flat-rate taxation regime allows, subject to conditions, rental income to be taxed at a fixed rate, applied to the gross amount of rent received.

Under this regime, expenses related to the property are generally not deductible. However, it offers simplified tax calculation and reporting obligations.

Rental income may also be included in the taxpayer’s overall taxable income and subject to the progressive income tax brackets.

In this case, certain expenses and costs related to the property may be taken into account, subject to the rules established by tax legislation.

Distinction between residents and non-residents

Israeli tax law distinguishes between tax residents and non-residents based on defined legal criteria. This distinction affects the taxation of rental income, reporting obligations, and, in some cases, withholding tax mechanisms.

Non-residents receiving rental income from property located in Israel remain taxable on such income, as it is sourced in Israel.

Rental income must be reported to the Israeli tax authorities within the deadlines set by law. Reporting and payment procedures vary depending on the applicable tax regime and the taxpayer’s status.

Failure to comply with reporting or payment obligations may result in financial penalties, late-payment interest, and additional administrative sanctions.

Specific situations and scope of this article

Certain specific situations—such as short-term rentals, furnished rentals, or ownership through corporate structures—may give rise to particular tax consequences.

These situations are not addressed in this article, which is limited to presenting the general tax framework applicable to rental income in Israel.

The taxation of rental income in Israel is governed by a structured legal framework offering several possible tax regimes. A clear understanding of the general principles, available regimes, and reporting obligations enables property owners to manage their rental income in compliance with applicable regulations.

Institutional sources and official references

Real Estate Taxation – Official Government Topic Page (GOV.IL)
https://www.gov.il/he/departments/topics/realty_taxation/govil-landing-page

Israel Tax Authority – Official Government Department Page
https://www.gov.il/he/departments/israel_tax_authority/govil-landing-page

KolZchut – Legal information on rental income taxation
https://www.kolzchut.org.il

Comprehensive guide to rental property in Israel: legal framework, lease agreements, tenant and landlord rights and obligations, guarantees, disputes, and specific rental situations.

Rental Property in Israel: Legal Framework, Rights, Obligations and Disputes

Residential rental property in Israel is governed by a specific legal and contractual framework regulating the relationship between tenants and landlords. Understanding the applicable legal rules and practices is essential to ensuring a stable and compliant rental relationship.

This pillar page centralizes all Immo Israel content related to rental property in Israel, providing a clear and structured overview of the legal and practical aspects of residential leasing.

The legal framework governing rental property in Israel

Any rental relationship in Israel is based on a legal framework combining statutory law, judicial decisions, and contractual practices. Understanding these foundations is essential before entering into a rental agreement.

👉 The Legal Framework of Residential Rentals in Israel

Tenants benefit from specific rights ensuring peaceful use of the property, while being subject to contractual and legal obligations relating to rent payment, maintenance, and proper use of the premises.

👉 Tenant Rights and Obligations in Israel

Landlord rights and obligations in Israel

Landlords are subject to legal duties aimed at ensuring lawful rental conditions, while also holding rights to protect their property and enforce contractual obligations.

👉 Landlord Rights and Obligations in Israel

Disputes between tenants and landlords: legal remedies

Disagreements between tenants and landlords may arise during the rental period or upon termination of the lease. Israeli law provides legal remedies ranging from amicable resolution to judicial proceedings.

👉 Disputes Between Tenants and Landlords in Israel: Legal Remedies

Certain rental situations involve specific considerations, particularly when the rental process is conducted remotely. Geographic distance, local practices, and legal requirements call for careful preparation.

👉 Renting a Property in Israel from Abroad: What You Need to Know

Real estate taxation in Israel does not only concern the acquisition of a property, but also the income generated from its ownership. Rental income derived from a property located in Israel is subject to a specific tax framework, which varies depending on the amount of income, the applicable tax regime, and the tax status of the property owner.

This article explains the general principles governing the taxation of rental income, the different tax regimes available, the applicable reporting obligations, and the distinctions made between residents and non-residents.

Rental property in Israel requires a clear understanding of the legal framework and the respective rights and obligations of tenants and landlords. This pillar page is designed to provide a reliable and structured overview of all existing Immo Israel content related to residential rentals.

Israeli Ministry of Justice – contract and real estate law: https://www.gov.il

KolZchut – tenant and landlord rights: https://www.kolzchut.org.il

Israeli Central Bureau of Statistics – housing data: https://www.cbs.gov.il

This article is provided for informational purposes only and does not constitute legal advice.

Rental Property in Israel – Complete Guide for Tenants and Landlords