Tax Authority on trail of tax evading landlords

Home rental  credit: Eyal Izhar
Home rental credit: Eyal Izhar

The Israel Tax Authority has begun to receive property ownership information from the Land Registry.

Israel Tax Authority director Shay Aharonovich is moving up a gear in the battle against tax evasion in real estate. The Authority is in the process of obtaining lists from the Land Registry (Tabu) of tens of thousands of people who own properties in Israel, in order to cross check the data with its own information and locate those who rent out properties without declaring the income.

Up to now, the Tax Authority has not had access to information on, for example, people who inherit properties or who build homes on land they own, as these are not tax events that require reporting. People who rented out such properties remained unknown to the Tax Authority unless they reported the income on their own initiative.

Such information will now be transferred to the Tax Authority by the Land Registry, which is responsible for documenting all transactions in real estate.

The information gathering exercise comes just before the announcement of a new voluntary disclosure procedure, in which people will be able to disclose unreported income without the threat of criminal charges.

According to the Israel Tax Authority’s current information, 1.63 million Israelis own one home, 290,000 own two, and 86,000 own three or more. By law, a person who rents out a home for more than NIS 5,654 monthly is required to report the income to the Tax Authority. Tax is payable on one of two tracks. Landlords can pay a flat 10% rate on the rental income, without deduction of expenses, or they can include the rental income with their general income and pay tax on it at their marginal rates (which can be up to 50%). On the latter track, expenses such as mortgage loan interest, repairs, and depreciation are deductible.

It is believed that the Tax Authority is embarking on its present campaign on rental income after technological advances have enabled it to analyze large quantities of data and carry out complex cross-checking.

Published by Globes, Israel business news - - on April 2, 2024.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2024.

Home rental  credit: Eyal Izhar
Home rental credit: Eyal Izhar
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