If you own a holiday home in Israel and rent it out on a short-term basis, you may be losing money and missing out on better Israel vacation options.
Israel’s short-term rental market is volatile – owners may only be able to rent their properties during the holiday seasons, and a disruptive event like last summer’s war can wipe out half of their annual income. Property owners are responsible for paying the annual city taxes, building fees (va’ad bayit) and utility bills (water, gas, electricity) for the entire year. They must rely on their property managers to recoup these variable costs by calculating the correct bills for each tenant.
It is often difficult for owners who live abroad to verify when their property is occupied, and whether the management company is collecting and reporting all the income due to them from each short-term tenancy. Long-term rentals, by contrast, cover all the owners’ expenses – taxes, fees and utilities. The income is steady and can be more easily monitored because you know what to expect.
We usually advise the owners of properties in Israel to rent their property on a long-term basis (for at least a year) because these tenants are more reliable than holiday-makers. Once the owner has a long-term tenant occupying the apartment, they can use the money they earn to spend their vacations in Israel.
An average apartment in Central Israel rents for 4,000+ New Israeli Shekels (NIS) per month, totaling at least 48,000 NIS per year. You can actually earn up to 61,200 NIS income per year (approximately $15,000) before you become liable for Israeli taxes. Since all the other costs of the apartment are covered by the tenants, your costs are minimal. With the income that you can earn from your rental property, you should be able to afford luxury all-included vacations in the top hotels in your favorite Israeli cities – Jerusalem, Tel Aviv, Herzliya, Eilat – wherever you choose!
At Creative Estates, we provide monthly and annual financial reports for every rental apartment, so you always know how much money is in the bank for you to spend during your next Israel vacation!
To speak to Creative Estates in complete confidence about the advantages of switching from short-term to long-term rental of your property in Israel, contact Shaun@CEIsrael.com