Rent from a residential apartment in Israel is taxed under one of three tracks: full or partial exemption up to a monthly ceiling (ILS 5,654 in 2026), a flat 10% on the gross rent with no deductions, or the regular track at your marginal rate after expenses such as mortgage interest and depreciation. You choose each tax year, and the right track depends on your rent, your other income and your expenses.
The short answer: rent from a residential apartment in Israel is taxed under one of three tracks. You can use the exemption track if the rent stays under a monthly ceiling (ILS 5,654 in 2026), pay a flat 10% on the gross rent, or include the rent with your other income and pay at your regular rate after deducting expenses. You choose the track each tax year, and the cheapest one depends on how much rent you get, what else you earn and what the apartment costs you.
This guide is for English-speaking landlords in Israel, including olim who bought an investment apartment, families who rent out a home after moving abroad, and owners who rent out a unit next to the one they live in.
The exemption is tested month by month. In 2026, residential rent is fully tax-exempt in any month in which the total rent from all your residential apartments is no more than ILS 5,654. The ceiling was the same in 2024 and 2025.
Above the ceiling, the exemption shrinks. The exempt amount is ILS 5,654 minus the amount by which your rent goes over ILS 5,654. Once your monthly rent reaches ILS 11,308, twice the ceiling, nothing is exempt.
Because the test is monthly, a month with higher rent does not affect the months around it.
The exemption applies to residential apartments rented out for people to live in. It suits owners with modest rent, often one apartment, and no large expenses to deduct.
You can pay 10% on the full rent you receive, with no deductions at all. Your other income does not affect the rate, which makes this track attractive if your salary or business income already puts you in a high bracket.
The track comes with a strict condition: the tax has to be paid within 30 days after the end of the tax year, in practice by January 30. Miss the payment and you can lose the track for that year.
On the regular track the rent is added to your other income and taxed at your marginal rate. In exchange, you deduct the real costs of the apartment: interest on the mortgage, repairs and maintenance, depreciation, and fees you paid to rent it out. This track can work out cheapest when the expenses are significant, typically a large mortgage, or when your total income is low.
The choice is made per tax year, so revisit it whenever something changes: a new mortgage, a second apartment, a drop in your other income or a move abroad.
Whether you file a return depends on your full situation, not only on the rent. If you file the full annual return, our guide to Form 1301 for olim explains the process. If you also run a business, rent is reported alongside it, and our osek murshe accounting service covers both.
Want help choosing a track for this year? Book a consultation call with our English-speaking team or call +972-52-448-5784. Meetings are by appointment in the Tel Aviv area.
On the exemption track, residential rent is fully exempt in any month in which your total residential rent is ILS 5,654 or less. Between ILS 5,654 and ILS 11,308 a month the exemption is partial, and at ILS 11,308 or more there is no exemption. The test is applied month by month.
In many cases, exempt residential rent alone does not require a return, but there are situations where reporting is required. Look at all of your income, not just the rent.
Only on the regular track, where you deduct expenses. The exemption track and the 10% track do not allow deductions.
The 10% is paid on the gross rent for the year, no later than 30 days after the end of the tax year, which in practice means by January 30.
No. Rent from property abroad is taxed under different rules, including a separate 15% flat-rate option, and the country where the property sits may also tax it.