preface

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8.2.3.4. Rental Income from Outside Israel
TAXATION
8.2.3.4.1. An individual accruing income derived from rental of
property outside Israel, is entitled to pay tax on such income
at the rate of 15%, instead of the individual’s graduated tax
bracket to which the individual is subject, if the said rental
income does not reach the level of business income.
8.2.3.4.2. However, the individual is not entitled to deduct expenses
incurred in generating the rental income, including credit in
respect of foreign tax paid abroad, from any amount paid.
Notwithstanding the above, depreciation expenses are
deductible.
8.2.3.4.3. An individual choosing to pay tax according to the graduated
tax bracket to which he is subject rather than at a fixed rate of
15%, will be entitled to deduct all expenses incurred in
generating the rental income and to receive a credit on
foreign taxes paid, subject to relevant legislation.
8.2.3.4.4. Special tax incentives applicable to "rental buildings". (See
chapter 7).
8.2.3.5. “Departure” Tax
An asset owned by an Israeli resident who ceased to be as such,
will be deemed to be sold on the day preceding the date on
which the assessee ceased to be an Israeli resident.
Such an Israeli resident who had not paid the capital gains tax
upon leaving Israel, will be deemed to have deferred the tax
payment until the date of disposal of the asset. As of that date,
he will pay the tax on gains derived from disposal of the asset,
pro rata to the period of holding the asset until his departure
from Israel, with the addition of interest and linkage differentials
from the date of actual disposal of the asset until the date of
paying the tax.
However, if payment of tax in Israel was due on the sale of the
asset at the time of realization, then the tax due on the capital
gains at the time of realization is payable instead of the tax
under the provisions of the preceding paragraph.
BDO Israel