Question:
I have acquired an investment property and am currently making mortgage payments while receiving rental income from tenants. Am I required to contribute maaser (tithe) from the rental proceeds? What if I myself need to rent or mortgage a different home to live in?
Answer:
Rental income is generally considered income, and therefore maaser should be separated from it. However, the halachic obligation depends on whether you are actually making a true profit after accounting for your own housing expenses.
There are two main scenarios:
1) You rent out the property but must rent another home for yourself
In this case, the money you receive as rent is not automatically considered profit. Your own rental payments offset the rental income you receive.
- If your rental income is greater than what you pay for rent, then the difference is considered profit, and you give maaser from that amount.
- If your rental income is less than your own rental expenses, then you are not considered to have made a profit at all, and therefore you do not give maaser from the rental income.
Example:
You receive $2,000 in rent but pay $1,700 for your own rental home.
Profit = $300 → Maaser applies to the $300.
But if you receive $2,000 and pay $2,200 for rent, you have no profit → No maaser.
2) You own your home [with or without a mortgage] and do not pay rent yourself
In this case, since you are not renting another property, your rental income is not offset by personal housing expenses. Therefore: You should give maaser monthly from the rental income you receive.
3) Alternative Arrangement (“One-Time Maaser at Sale”)
If taking maaser monthly from rental income makes the investment financially difficult, you may rely on a second approach:
- Do not take maaser from the rental income during ownership that is invested to pay the mortgage, taxes, and upkeep.
- Then, when you sell the home, take maaser from the entire profit, defined as: Sale price minus your initial down payment minus any payments you made using money on which you previously gave maaser. Under this approach, since you did not give maaser monthly on the rental income, the entire amount of principal gained through rental payments is included in the final profit from which you must take maaser.
Example:
Suppose you collect $2,000 in rent. If your mortgage, taxes, insurance, and other expenses for that month total $1,900, your profit is $100. You would give maaser on the $100 profit (i.e., $10).
But if your expenses total $2,200, you have no profit, and no maaser is required at this time. However, when you sell the home, you will not deduct from the profit the $2,000 monthly investments that you never took Maaser on.
Sources:
See Sefer Oarch Betzedaka 9:6 in name of Rav Elyashiv and Rav SZ”A; Shevet Hakehasi 6:334; Yad Melachim in name of Rav Chaim Kanievsky; Pesakim Uteshuvos 249:27 footnotes 260; Mishnas Hamishpat 249:212-213
Adapted from the same principles cited in: Igros Moshe Y.D. 2:114; Igros Kodesh 18 p. 384, printed in Shulchan Menachem 5:88; Pesakim Uteshuvos 249:25 footnote 239.
Maaser and Rental Properties: The Follow‑Up Explanation
Question:
You previously stated that someone who owns a rental property should separate maaser from the full rental income, even if they have significant expenses such as mortgage payments, maintenance, repairs, taxes, and other costs. This seems difficult to understand. Everyone agrees that standard business expenses reduce the amount from which maaser is calculated. If a store owner pays $1,000 for merchandise and sells it for $2,000, they take maaser only from the $1,000 profit. The expenses that were invested directly into generating that income are deducted. So why is rental property different? If the landlord must pay $2,000 of expenses (mortgage, maintenance, etc.), and the rental income is $2,000, the landlord did not truly “earn” anything that month. Even if the rental income is higher, shouldn’t maaser be taken only from the net profit, not from the entire rental income?
Please explain.
Answer:
Your understanding of maaser and business expenses is generally correct: the halachic rule is that legitimate expenses necessary to generate income may be deducted before calculating maaser. In a typical business scenario—such as purchasing merchandise for resale—the money spent on inventory leaves your possession and is converted into goods. When those goods are later sold, only the true profit is considered new income entering your hands, so maaser is taken only from that profit. However, rental property works differently because the asset never leaves your ownership. Even though you may spend money on mortgage payments, taxes, repairs, or maintenance, the property itself remains fully yours throughout. Those expenses are not the same as purchasing merchandise that exits your hands; instead, they are investments into maintaining or acquiring an asset that stays in your possession and may even appreciate in value. For this reason, the rent you receive is viewed as fresh income generated by a permanent asset you still own. Mortgage payments in particular are not considered deductible for maaser because they increase your ownership of the property, similar to transferring funds from one pocket to another rather than losing them in the process of generating income. Therefore, even in months when expenses equal or exceed the rental income, the halachic perspective remains that the rent constitutes income from which maaser is taken, since the expenses were not the type that erase capital but rather enhance or preserve an asset you continue to hold. This is why rental income is treated differently from merchandise profit, and why maaser applies to the rent itself rather than the net cash flow after expenses.
This principle, however, remains true only as long as you yourself are living in your own property or otherwise do not incur personal housing expenses as a direct consequence of renting out your home. The moment you must rent another residence for yourself to live in because your own property is being rented to someone else, the halachic structure changes. In such a case, the rent you receive from your property is effectively offset by the rent you are paying for your replacement home. Unlike a mortgage payment, which is merely transferring money from one pocket to another and increases your ownership in your own asset, the money you pay to rent a different home is a true outgoing expense: it leaves your possession permanently and provides you with no lasting capital. Since you are only incurring this rental expense in order to enable the income‑producing use of your own property, it functions as a genuine business expense tied directly to the generation of that rental income. Therefore, the rent you pay for your own residence may be deducted from the rent you receive from your property when calculating maaser, because this outgoing cost is not building your capital but rather represents money permanently spent for the sake of enabling rental income.
Sources:
See Sefer Oarch Betzedaka 9:6 in name of Rav Elyashiv and Rav SZ”A; Shevet Hakehasi 6:334; Yad Melachim in name of Rav Chaim Kanievsky; Pesakim Uteshuvos 249:27 footnotes 260; Mishnas Hamishpat 249:212-213
Adapted from the same principles cited in: Igros Moshe Y.D. 2:114; Igros Kodesh 18 p. 384, printed in Shulchan Menachem 5:88; Pesakim Uteshuvos 249:25 footnote 239.
