Israel: Taxes and Costs
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Effective tax rates are low in Israel
Effective Tax Rate on Rental Income |
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| Monthly Income | US$1,500 | US$6,000 | US$12,000 |
| Tax Rate | 7.5% | 7.5% | 7.7% |
| Click here to see a worked example | |||
Source:
Disclaimer |
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Income Tax
Rental income tax earned by non-resident foreigners can be taxed in two ways. It can be taxed using the flat-rate option wherein the gross rental income is taxed at a flat rate of 10%. No deductions are allowed when this option is chosen. The other option is to be taxed at progressive marginal rates. The taxable income is computed by deducting income-generating expenses from the gross income. Allowable deductions are depreciation, building insurance, municipal duties, management charges, maintenance and repairs. Depreciation rate is 2% per annum. Taxable income is then computed at the following rates:
These tax bands and rates are only applicable for the year 2006. Changes in the income tax bands and rates are to be expected in the next few years.
INCOME TAX |
|
| TAXABLE INCOME (US$) | TAX RATE |
| Up to US$31,200 | 30% |
| US$31,200 – US$56,000 | 36% |
| US$56,000 – US$96,500 | 37% |
| Over US$96,500 | 49% |
| Source: Global Property Guide | |
Corporate Route
Rental income from Israeli assets by corporations is taxed at the corporate tax rate of 31%. This rate is only applicable for 2006 and should be reduced gradually to 25% until the year 2010.
Corporations can deduct all relevant expenses from the gross rental income such as depreciation, insurance, municipal duties, management charges, maintenance and repairs.
Israel - more data and information
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