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Does the Oleh 10-year tax exemption cover rental income from property abroad?

Yes. A new immigrant (oleh chadash) and a qualifying returning resident enjoy a ten-year exemption from Israeli tax on foreign-source income under Section 14 of the Income Tax Ordinance, and that exemption covers rent received from real estate located outside Israel. For ten years from the date of becoming an Israeli resident, foreign rental income is neither taxed nor, generally, required to be reported in Israel. The exemption applies only to non-Israeli-source income, so rent from an Israeli property remains fully taxable.

Section 14 of the Income Tax Ordinance grants olim and senior returning residents a sweeping ten-year exemption on income produced or accrued outside Israel, including passive income such as foreign rent, interest, dividends, and capital gains on foreign assets. The exemption runs from the day the person becomes an Israeli tax resident and is designed to ease the transition to Israeli residency without immediate exposure to worldwide taxation. Because foreign rental income falls squarely within foreign-source income, an oleh receiving rent from an apartment in their former home country pays no Israeli tax on it during the exemption window, regardless of the amount.

Two cautions matter for anyone relying on this. First, the exemption is Israeli only. The country where the property sits, and any country that taxes by citizenship such as the United States, may still tax the rent under its own rules, so double-taxation planning remains essential. Second, the relief expires at the ten-year mark, after which foreign rent becomes taxable in Israel and must be reported. Our guide on Oleh benefits and tax breaks explains the full scope of the relief and the reporting choices available. Keeping clear records of the residency start date and the property income from day one prevents disputes with the Israel Tax Authority when the exemption ends.

⚖ In Practice
  • Governing law: Section 14, Income Tax Ordinance (New Version); new-immigrant and returning-resident reliefs
  • Competent authority: Israel Tax Authority (Rashut HaMisim BeYisrael)
  • Scope: foreign-source income, including rent from property located outside Israel
  • Duration: ten years from the date of becoming an Israeli resident
  • Reporting: generally exempt from both tax and reporting on the foreign rent during the period
  • Key limit: rent from Israeli property is fully taxable, and home-country tax on the foreign rent may still apply

From the full guide: Oleh Benefits & Tax Breaks for New Immigrants to Israel

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Get a Free Consultation with Adv. Eli ShimonyPrepared under the direction of Adv. Eli Shimony, Eli Shimony Law Office · Editorial policy

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