The three tracks
- Exemption track: rent up to ₪5,654 a month is fully exempt. Above it the exemption falls shekel for shekel, and the taxable part is taxed by brackets with no expenses.
- 10% track: 10% of all the rent, with no expenses, depreciation, credits or offsets.
- Regular track: rent less expenses and depreciation joins your income. Under 60 the rate is at least 31%; from 60 the regular brackets from 10% apply.
Exemption by monthly rent
| Rent | Exempt | Taxable | 10% tax |
|---|---|---|---|
| ₪4,000 | ₪4,000 | ₪0 | ₪400 |
| ₪5,654 | ₪5,654 | ₪0 | ₪565 |
| ₪6,500 | ₪4,808 | ₪1,692 | ₪650 |
| ₪8,000 | ₪3,308 | ₪4,692 | ₪800 |
| ₪10,000 | ₪1,308 | ₪8,692 | ₪1,000 |
| ₪11,308 | ₪0 | ₪11,308 | ₪1,131 |
| ₪13,000 | ₪0 | ₪13,000 | ₪1,300 |
Example
An employee aged 45 with ₪150,000 of taxable income rents out a unit at ₪6,500 a month all year, with ₪20,000 of expenses and depreciation. Annual rent is ₪78,000.
| Track | Taxable per year | Tax per year |
|---|---|---|
| Exemption track | ₪20,304 | ₪6,294 |
| 10% track | ₪78,000 | ₪7,800 |
| Regular track | ₪58,000 | ₪17,980 |
Here the exemption track is cheapest. As rent approaches ₪11,308 a month, the exemption disappears and the 10% track pays off more.
What the calculator leaves out
- Credit points, which reduce overall tax and can change the result.
- The 3% surtax on taxable income above ₪721,560 a year, and further tax on capital income.
- Non-residential rentals, rentals abroad and units recorded in business books.
- Rent that changes month to month: the ceiling is tested per month, and the calculator assumes a fixed amount.
Residential rental is also VAT-exempt. If you are also an osek patur, check the osek patur ceiling. This is general information, not tax advice. Before choosing a track, especially with several units, consult an accountant.
Sources
- Income Tax Law (Exemption on Income from Renting a Residential Apartment), 1990, on Wikisource (Hebrew)
- Income Tax Ordinance, on Wikisource (Hebrew)
- Israel Tax Authority: income tax guide for salaries, January 2026 onwards (PDF, Hebrew)
- Value Added Tax Law, on Wikisource (Hebrew)
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