Who is eligible for the Section 122(6) rent offset in Israel?

Individuals who own a sole residential apartment (as defined by law), rent it out for residential use, and simultaneously rent another residential apartment in Israel for their own and their immediate family's residence.

What is the maximum deduction allowed under Section 122(6)?

Eligible landlords can deduct the rent they pay for their own home up to a ceiling of 7,500 ILS per month (90,000 ILS per year) from the rent they collect, paying 10% tax only on the positive difference.

What happens if the rent I pay is higher than the rent I receive?

Your taxable rental income drops to zero and you pay 0 ILS in rental tax. However, the negative difference cannot be carried over or offset against salary or business income.

Landlord Tax Benefits • 6 min read

Renting Out While Renting? The Section 122(6) Tax Deduction Guide (Up to 7,500 ILS/mo)

✍️ RentMate Research Team | Updated: October 2026

Many Israeli families own a single residential apartment—which they rent out—while simultaneously renting another apartment closer to work or schools for their own residence. Previously, if the rent they collected exceeded the monthly exemption threshold (5,654 ILS), they owed tax even when 100% of that income went toward paying their own landlord. The enactment of Section 122(ו) [Section 122(6)] of the Israeli Income Tax Ordinance created a major tax relief for single-apartment owners.

How Does the Section 122(6) Mechanism Work?

Under Section 122(6), an individual who owns a sole residential apartment (Dirat Megurim Yechida) and rents it out for residential purposes may elect the 10% flat tax track (Section 122) and deduct the monthly rent they pay for their own family's residential apartment in Israel—up to 7,500 ILS/month (90,000 ILS/year)—from the rental income they receive. The 10% tax is then calculated exclusively on the positive difference:

Tax Due = 10% × (Rent Received − Rent Paid up to 7,500 ILS/mo)

Core Eligibility Requirements

Sole Residential Apartment: The rented property must be the only residential apartment owned by the family unit (the taxpayer, spouse, and children under 18, subject to statutory fractional ownership rules).
Simultaneous Residential Leases in Israel: Both the apartment you rent out and the apartment you rent for your own immediate family's residence must be in Israel and used strictly for residential purposes during the same period.
Not Employer-Funded or Deducted as a Business Expense: The rent you pay cannot be reimbursed by your employer or claimed as a business expense.

💡 Concrete Numerical Example — Saving 8,400 ILS/Year:
Suppose you own a single apartment rented out for 8,000 ILS/month (96,000 ILS/year), while you pay 7,000 ILS/month (84,000 ILS/year) to rent your family home:

Standard 10% Track (without Sec. 122(6)): 8,000 × 10% = 800 ILS/month (9,600 ILS/year).
Partial Exemption Track: Adjusted exemption is 3,308 ILS; taxable portion is 4,692 ILS taxed at 31% = ~1,455 ILS/month (~17,460 ILS/year).
With Section 122(6) Offset: (8,000 − 7,000) × 10% = 100 ILS/month (1,200 ILS/year — saving 8,400 ILS every year!).

What If Rent Paid Equals or Exceeds Rent Received?

If you collect 6,500 ILS/month from your tenant and pay 7,200 ILS/month to your landlord, your taxable rental income drops to 0 ILS and your rental tax liability is 0 ILS. However, any negative balance ("loss") cannot be used to offset salary, freelance, or capital gains income.

Scenario	Monthly Rent Received	Monthly Rent Paid (Capped at 7,500 ILS)	Taxable Difference	Monthly Tax (10%)
Scenario A: Rent Paid > Rent Received	6,500 ILS	7,200 ILS	0 ILS	0 ILS
Scenario B: Moderate Positive Spread	8,000 ILS	7,000 ILS	1,000 ILS	100 ILS
Scenario C: Rent Paid Above 7,500 ILS Cap	9,500 ILS	8,500 ILS (Recognized: 7,500 ILS)	2,000 ILS	200 ILS

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⚖️ Legal & Tax Disclaimer: The information in this guide is provided for general educational purposes only and does not constitute legal advice, tax advice, or a substitute for professional consultation with a qualified attorney or CPA tailored to your specific circumstances.