Can I split my Israeli house into two rental units while I live abroad?

Israel has run this experiment twice. Amendment 117 allowed ground-attached homes to be split into two units as a temporary measure and then lapsed, and Amendment 155 to the Planning and Building Law 5725-1965, published on 7 August 2024, brought the route back with tighter conditions. The headline numbers are 120 square metres for the existing unit and 45 square metres for the new one, and the new unit may be let or occupied by a close relative but not sold on its own.

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Detailed Answer

The conditions are cumulative and a local committee will refuse on any one of them. The house must be a ground-attached dwelling, the existing unit at least 120 square metres and the new unit at least 45 square metres, and the plot may not exceed four units per dunam once the split is done. The new unit cannot sit above or below the existing one in a way that creates a separate storey outside the permitted envelope, and the original plan for the plot must predate 7 August 2017. Areas inside the influence zones of the planned Dan metro stations are excluded outright, which knocks out a wide band of Gush Dan. Parking is treated pragmatically: no space is required for a unit under 60 square metres, though the local committee may ask for a payment in lieu of one. The financial hook is the levy. Adding the unit attracts a reduced betterment levy of 34% rather than the standard 50%, collected in part on the permit and in part when the rights are later realised, and development levies to the municipality and the water corporation sit on top. The measure is a temporary provision with a defined application window, which the Interior Minister may extend in stages, so the first question in any file is whether the window is still open in that local committee.

For an owner living abroad the decisive constraint is not the statute but the permit process. The application is made to the local planning and building committee by a licensed architect or engineer acting as the orech bakasha, and it needs an owner's signature, which from New Jersey or Melbourne means a power of attorney signed before a notary and apostilled. Expect the local authority to want municipal clearances before it issues, and expect the arnona file to be re-cut into two dwellings afterwards, which raises the annual bill and is often forgotten in the yield calculation. The tax picture also changes. Two separate lettings of a house you own from abroad are still rental income taxed in Israel, and a second unit can push you past the exemption threshold or make the 10% flat track look different from what your accountant modelled. Where the intention is short-stay letting rather than a residential tenancy, the use question is separate and stricter, and we address it in our answer on short-term Airbnb letting of an Israeli apartment as a non-resident.

In Practice: Amendment 155 to the Planning and Building Law 5725-1965, published 7 August 2024, permits splitting a ground-attached home where the existing unit is at least 120 square metres and the new unit at least 45 square metres, subject to a maximum of four units per dunam and an original plan approved before 7 August 2017. The permit is issued by the local planning and building committee, and the added unit carries a reduced betterment levy of 34% rather than 50%, so an assessed betterment of NIS 300,000 produces a levy of roughly NIS 102,000 before development levies. The new unit may be let or occupied by a close relative but its ownership may not be transferred separately. Metro influence zones are excluded, and the application window is a temporary provision extendable by the Interior Minister, so confirm it is open before spending money on plans.

When to Consult a Lawyer

• Your property sits anywhere near a planned Dan metro station, because the exclusion is drawn by influence zone rather than by street and an architect's fee spent inside one is money gone
• You intend to sell the new unit later or leave it to a different child in your will, since the statute blocks separate transfer of the added unit and a will drafted on the wrong assumption will not work
• The house is jointly owned with siblings after an inheritance, as the application needs every registered owner's signature and one absent co-owner abroad stops the file completely

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Speak With an Israeli Attorney

The split rules reward owners who check eligibility before they hire an architect and punish those who do it the other way round. We confirm the plot qualifies, quantify the levy exposure and put the powers of attorney in place so the permit can be pursued without you flying in.

Contact us for a confidential initial consultation.