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Re’eh- Deducting mortgage Payments from Income when calculating Ma’aseir



I bought a house as an investment in order to supplement my income. I took a mortgage from the bank which I repay using all the income from the rent. Am I supposed to give ma’aseir on the rental income or, since I use all the rent money to pay off the mortgage, it is as if I have no present income and will only need to give ma’aseir when I finish paying off the mortgage and begin to retain the rental income?


Even though all the rent you receive goes to make your mortgage payments, you really do have income even now. It is just that you are using that income to pay back your mortgage. Thus, we should rephrase your question as: Is paying off the mortgage an expense that reduces the amount of ma’aseir that you are required to pay from rental income?

While there are poskim (Rishon Letzion cited by Birkei Yosef 249, 5) who maintain that supporting one’s family reduces one’s income, the consensus of later poskim (Beis Deno shel Shlomo (res. YD 1), Birkei Yosef, Oruch Hashulchan (249, 7) and many others) is that one may not deduct from his income the cost of supporting one’s family.

However, the ruling of the Chavos Yo’ir (res 224) is that one may deduct expenses that are incurred in order to earn income. For example, the Chavos Yo’ir (cited by Pischei Teshuvo 249, 1) ruled that if one incurs travel expenses in order to go to the market to purchase goods that he will sell in his store, he may deduct the travel costs from his income when computing his ma’aseir requirement.

This ruling has become the consensus opinion of later poskim.  It is ruled by Chafetz Chaim in Ahavas Chessed (18, 2, 1), Iggros Moshe (YD 1, 143) and many others. The reason (explained by Iggros Moshe) is because the obligation of ma’aseir is to give a tenth of one’s profit. Therefore, when one spends money in order to earn the profit, his profit is reduced by this expense.

An illustration of this difference is whether one may deduct taxes from his income when computing ma’aseir. Rav Moshe Feinstein (ibid) rules that taxes like sales tax for household objects and real estate tax on one’s home are generally not expenses that can be used to reduce one’s ma’aseir obligation since they are not related to one’s income. However, income tax, since it is an expense that results from earning income, does reduce one’s income and thus the amount he needs to give as ma’aseir.  We should note that even though Rav Moshe rules that real estate tax for a home may not be deducted, in a case like yours where you earn a profit from the real estate, the real estate tax may be deducted since it is an expense that is incurred in order to earn income.

There are certain expenses that are controversial. For example, if a woman needs to hire a babysitter in order to work she may deduct from her income the cost of the babysitter since it is an expense that is necessary to enable her to earn money. However, if the babysitter does light housework as well, the poskim have a dispute. The Tsedoko U’mishpot argues that if the babysitter does jobs that the mother cannot do or even finds difficult to do because she is working, the entire cost of the babysitter may be used to reduce the mother’s ma’aseir obligation since the entire expense of the babysitter results from the mother’s work. However, he maintains that if, for example, the babysitter also washes the floors and previously the mother hired someone to wash the floors, then the mother has to deduct from her expense for the babysitter the amount she otherwise paid for someone to wash her floors.

The Sha’arei Tseddek (9, footnote 37) disagrees with the last ruling. He rules that if the babysitter does not charge more because she washes the floors, then her entire salary may be deducted because the entire expense resulted from the mother’s going to work. It seems that support for this can be found in the ruling of the Taz (249, 1) (discussed at length in an earlier article) that one may derive incidental benefits from his ma’aseir.

Another issue is when one buys something where the benefit is to both the business and the owner. For example, if one buys a car which he will use both for his business and for himself, the Sha’arei Tseddek (9, footnote 45) rules that if the owner would not have bought a car just for his own use, the entire expense of the car comes off his income. He rules that the owner may use the car since, as we said, one may derive incidental benefits from his ma’aseir.

However, this depends on circumstances as follows. The Sha’arei Tseddek explains that since generally a car has resale value, in any case the owner may only reduce his maseir by the amount of the depreciation of the car since that is the expense each year that results from his work. However if the owner’s use affects the amount of the depreciation, one could only reduce his income by the portion of the depreciation that results from the business use. In this case the personal use is not incidental, as it was in the case of the babysitter, since it caused the amount of depreciation to increase.

Turning to your question, you must differentiate between the two components in your mortgage. The house that you bought is a business expense since you bought the house in order to earn money and the rental payments are your income that needs to be ma’aseired. However, it is the same as buying a car that is needed for business where each year you may only deduct the depreciation but not the full cost of the car. Therefore, the amount of the mortgage payment that is payment for the principle cannot come off your income because you are essentially buying a house with that part of the money that you receive as rent. Those payments increase your equity in the house. The only part of the mortgage payment that can come off your income is the real depreciation of the house, if any. (This means the real depreciation in the value of the house, and not what the tax laws may recognize as depreciation.) Also, the amount that you pay the bank as interest on the loan reduces your profits since that is an expense that you are spending in order to gain you rental income, since it is an expense for the loan and is not realized in the value of the house.

In conclusion: You should add up all your rental payments and deduct from that amount only the amount that was paid to the bank as interest but not the portion that was used to repay principle. If there is real depreciation in the value of the property from its use, you may deduct that also, but that is rare nowadays.


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