According to the suspicion, at least four apartments were rented out over the years, the income was deposited into her accounts and her children’s accounts, and it was not reported as required by law
Rental income is not "private money" that can be kept outside the Israel Tax Authority’s view, particularly when several apartments, significant income, and deposits into multiple accounts are involved
What are the suspicions published against Tali Partok-Zahavi? According to the suspicion, between 2018 and 2025, at least four apartments were rented out to different tenants, generating income of at least 3 million ₪. According to the publications, the funds were deposited into the bank accounts of Partok-Zahavi and her two children but were not reported as required by law. It was also noted that each of the apartments was rented for an amount significantly higher than the exemption threshold set by law for residential rental income (5,654 ₪ as of 2026). It is important to emphasize these are suspicions only, the investigation is ongoing, and every person is presumed innocent.
How would the Israel Tax Authority look at this situation? On the face of it, this is not only a question of whether rent was received. It also raises broader questions: how many apartments were involved, who owned each apartment, into which accounts the money was paid, and whether there was a match between the actual income and what was reported to the Israel Tax Authority, if anything was reported at all. These questions are not relevant only to someone with a public profile or luxury assets. They are also relevant to an ordinary family that rents out one apartment or several apartments and assumes that the matter is too simple to require a closer review.
What makes this case particularly significant is not only the total amount involved, but also the way in which the income was allegedly handled. When rental income is deposited not only into one account but into several accounts, including those of family members, the Israel Tax Authority will not necessarily be satisfied with the formal registration. It may examine who actually benefited from the income, who controlled the properties, who managed the rentals, and who was required to report. In other words, depositing funds into the account of a child or another family member does not necessarily sever the link between the income and the person who is required to report it.
At this point, it is also important to understand the most common mistake made by landlords: the assumption that all residential rental income is exempt from tax or at least does not require special attention. In practice, Israel has several possible tax tracks for residential rental income, including an exemption up to a certain threshold, a reduced tax track, and the regular tax track. Once the income exceeds the relevant threshold, or where the holding and rental structure is more complex, it cannot be automatically assumed that everything is exempt or that no reporting is required.
In recent years, the Israel Tax Authority has been taking a more focused approach to the residential rental sector. It examines not only reports that have been filed, but also gaps between property ownership, the flow of funds, and the actual situation. Landlords should not panic over every headline, but they should understand that enforcement in this area has changed. What some members of the public once regarded as a gray area is now viewed as an area that is much more firmly on the radar.
Residential landlords have three main tracks for reporting rental income:
- The exemption track, which may apply up to a monthly threshold of 5,654 ₪ as of 2026. When the rent exceeds the threshold, the exemption is gradually reduced, and when the monthly income reaches twice the threshold, namely 11,308 ₪, the exemption is eliminated.
- The second track is the reduced 10% tax track on the full rental income, usually without the ability to deduct expenses, depreciation, or ordinary offsets.
- The third track is the regular track, under which the income is taxed at the regular tax rates, but in appropriate cases deductible expenses may be claimed.
The choice of track is not automatic, and it can have a material impact both on tax liability and on the manner of reporting.
Based on our professional experience, in many cases the problem is not only an intention to conceal, but an ongoing pattern of conduct without proper control. An apartment purchased years ago, another apartment added later, a child helping with management, money going into one account and then another, and a general sense that “we will deal with it when we get there.” But in tax matters, sometimes the delay itself is what creates the main risk. As time passes, it becomes harder to explain, harder to gather documents, and harder to argue that it was only a matter of inattention.
We have previously encountered a case involving a family that held several residential apartments, where rental income was deposited over the years into several different accounts within the family. The family members were certain that everything was clear among themselves, but when an orderly review was conducted, it became apparent that there was no full match between the registration, the agreements, and the actual deposits. Before any external approach was made, a complete mapping of the facts was carried out, and a transparent and careful reporting approach was arranged. Time is not on the side of those who ignore these issues. Therefore, anyone who rents out an apartment in Israel, and certainly anyone who holds several apartments, must know exactly which tax track applies, whether there is a reporting obligation, and whether there is alignment between the ownership, the income, the deposits, and the documents. There is no need to panic, but it is also not advisable to assume that the current silence guarantees quiet in the future.
Nimrod Yaron & Co. specializes in Israeli and international taxation. Our team is composed of professionals with years of experience at the Israel Tax Authority, alongside experience at leading firms and law offices, bringing together a legal and economic perspective. We advise private and public companies, Israeli and foreign companies, global venture capital funds, as well as clients seeking focused advice in clear, accessible language. We also work with a professional network of accounting firms and law offices around the world, in order to provide comprehensive support in cross-border matters.
If you rent out an apartment, if your family has several properties, or if you are not sure whether the income was properly reported over the years, now is the time to conduct an orderly review and regulate reporting in a responsible and transparent manner. A strategic consultation meeting can help clarify the picture before it becomes more complex.
FAQ
Is all residential rental income exempt from tax?
No. The exemption applies only up to a certain threshold and subject to the conditions set by law. Therefore, in many cases there is a tax liability or a need to examine the reporting obligation.
Does depositing funds into a child’s account resolve the reporting obligation?
Not necessarily. The Israel Tax Authority examines who actually derived the income, who controlled the property, and who was required to report, not only the account into which the money was deposited.
Do several apartments require a more careful review?
Yes. When several apartments are involved, the Israel Tax Authority may examine more carefully the scope of the income, the track chosen, the manner of reporting, and the alignment between ownership and deposits.
What is the first step if there is uncertainty?
The first step is to collect rental agreements, bank statements, and income data, and then review the reporting obligation and the appropriate tax track before the gaps accumulate.
