The Israel Tax Authority has produced new rules for citizens who own and lease 10 or more housing units, and five to nine housing units.
Those who own 10 or more housing units are likely to be classified as those with “business income.” They are therefore likely to face taxes that may be as high as 45 to 50 percent, according to new rules in a draft circular being published for public comment on classification of income from rental housing units, according to Globes.
People who own and lease up to five private housing units are likely to be entitled to a reduced rate of 10 percent taxes, because fewer than five housing units is considered “passive income” under the new rules.
But those who fall in the middle – owning and leasing for rent between five and nine housing units – may find themselves discussing their status with the Israel Tax Authority to determine whether they meet criteria for “passive income” or “business income.” In this category, each will be determined on a case by case basis.
For those currently renting in Israel, “arnona” is a municipal property tax, which goes to pay for water, sewer, street maintenance, the mayor and so forth. The above tax is a national income tax related to income from the rental itself, known as “mas hachnasa.”