Treasury considers: tax on rental income in exchange for reducing purchase tax

The Israeli Treasury is considering taxing rental income from the first shekel alongside reducing purchase tax for investors, as part of the discussions of the Committee of Three ahead of the 2027 Arrangements Law. The proposal includes canceling the current exemption ceiling and establishing a database of rented apartments, but sources in the committee express reservations about the outline.

The Israeli Treasury is examining a move to tax rental income from the first shekel, alongside reducing purchase tax for investors, as part of preparations for the 2027 Arrangements Law. The initiative, presented to the Committee of Three headed by Budget Commissioner Maharan Prozner, Chief Economist Dr. Shmuel Abramzon, and Tax Authority Director Shai Aharonovich, includes canceling the current exemption ceiling (approximately 5,600 shekels) and establishing a database of rented apartments. On the other hand, a reduction in purchase tax for investors, currently standing at 8%–10% on additional apartments, is being considered. A source familiar with the discussions said, "There is no deal at the moment" and that the proposal is not acceptable to all committee members. The Tax Authority estimates that the taxation could yield 2–5 billion shekels annually for the state coffers.