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Money received as rental income is considered income and is subject to the rules of taxation. In each country, there is a different classification for income from rent and, according to the same classification, the tax rate that the taxpayer has to pay is determined.

In Israel, there is a distinction between two types of taxpayers who rent an apartment:

1. Ìý

   •ÌýÌýÌýÌý renting an apartment as part of the landlord's business, and

2. Ìý

   •ÌýÌýÌýÌý renting an apartment by an individual

Unlike renting an apartment as part of the landlord's business, which is subject to income tax as much as business income, income from renting an apartment by an individual is taxable, but receives reduced taxation options (and even exemption in some cases to be specified) to encourage apartment rentals by individuals.

The different options for taxing an income from renting an apartment

Section 2(6) of the Income Tax Ordinance [New Version] 5721-1961 ('the Ordinance') provides that rent arising from a residential property, land, or an industrial building is income which is taxable.