Rent your property in Israel? Find out which tax regime you are subject to.
Are you an investor or would you like to buy an apartment in Israel in order to rent it? In this case, Israeli taxation has provided different tax regime interesting and some will be even according to the desire of the owner.
As for the tax exemption: Owners receiving rental income and meeting the criteria that will be stated will be exempted from taxation as provided by Israeli law:
- The property being intended for habitation and not for rental purposes
- If the tenant is an individual
- If the monthly rent does not exceed 5,010 nis (this sum is updated every year and refers to the leases of the year 2017)
As for the flat tax of 10%: This option is considered the most advantageous because it allows the owners to pay a flat tax of 10% of the amount of rents collected in one year according to article 122 of the Israeli law on taxation. However, this solution also has certain disadvantages because this tax must be paid during the first thirty days of the new fiscal year ie until January 30; but also because there will be no costs, costs or depreciation that can not be deducted from these amounts collected and therefore the flat tax.
Taxation on income via the taxation of rents: In this case, homeowners can reduce the rents received as an integral part of their total income. This will allow them to count the costs related to the apartment as work, repair, legal fees or agency fees unlike the flat tax of 10%.
To conclude : It is essential for an investor or owner to be aware of the tax regime that will be applied to him in his property income before renting his property in order to be able to define in the best way how much the rent will be.
Source: real estate credit in Israel