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.
