Rental Income Tax Calculator

Rent you receive is taxed under the head income from property (section 15 of the Income Tax Ordinance). You start with the gross rent, subtract the deductions that section 15A allows, and what is left is added to your income from other sources. The total is taxed at the slab rates for the year. For individuals and AOPs the old separate rental rate table was removed by the Finance Act 2021, so there is no special property slab: rent simply sits on top of your other income.

Showing the tax as a difference is the honest way to see what rent costs you, because the slabs are progressive: the same rent is taxed lightly if it is your only income and heavily if it sits above a large salary. The calculator does this for you and also tracks the tenant's withholding, so you see how much is already paid and how much is left.

A worked example

Rent of Rs 100,000 a month is Rs 1,200,000 a year. The repairs allowance is Rs 240,000, so Rs 960,000 is taxable. With no other income the tax is Rs 54,000. Deductions you can document reduce it further: with Rs 15,000 of insurance, Rs 25,000 of property tax and Rs 40,000 of collection cost, taxable rent falls to Rs 880,000 and the tax to Rs 42,000.

• Repairs, one fifth of the rent. A flat allowance of 20% of the rent chargeable, with no receipts. It applies even if you spent nothing on repairs.
• Insurance premiums paid to insure the building against damage or destruction.
• Property tax and local charges: any local rate, tax, charge or cess paid to a local authority or government, but not income tax.
• Ground rent paid on the property.
• Mortgage profit or interest on money borrowed to buy, build, renovate or extend the property, and the bank's share of rent under a sharing scheme. The home loan calculator shows the instalment and the total markup a loan costs.
• Collection and administration costs actually paid, up to 4% of the rent.
• Legal costs to defend your title to the property or a court case about it, and irrecoverable rent that was taxed when it fell due, once you have taken reasonable steps to recover it.

An expense claimed here cannot be claimed again under another head, and if you also use the low-cost housing loan credit you cannot claim the same profit in both places. Keep invoices, bank advices and the rent agreement; section 21, which restricts business deductions, applies to these claims in the same way.

A tenant that is a prescribed person must deduct tax from the rent it pays you. The rates depend on the gross yearly rent. They are doubled if you are not on the Active Taxpayers List, because rule 1 of the Tenth Schedule raises every withholding rate by 100% for a person who is not on it. FBR's rate card prints a separate non-filer figure only for companies, but it cites that rule for the individual and AOP rows too.

These withholding rates are applied to gross rent, so they are not your income tax. For individuals and AOPs they are adjustable: they count against the tax on your return. When your deductions are large or your other income is small, withholding can exceed the tax and you get a refund. When rent sits on a large salary, the opposite happens and you owe more. Not every tenant has to withhold. The duty falls on the government, companies, non-profits, diplomatic missions, private schools, hospitals, clinics, boutiques and beauty parlours, and on any individual or AOP paying Rs 1,500,000 or more of rent in a year. A smaller private tenant does not deduct anything, and you then pay the whole tax yourself when you file.

For a landlord whose rent is the only income, in tax year 2027, with the repairs allowance and no other deduction, and a tenant that withholds at the filer rates:

Notice how withholding on gross rent exceeds the tax for mid-sized rents: at Rs 100,000 a month the tenant withholds Rs 75,000 against tax of Rs 54,000. As a non-filer the withholding would be Rs 150,000, the same tax with a larger refund to claim.

Most landlords also earn from a job or a business, and then the question is how much extra tax the rent adds. The table takes a salaried landlord earning Rs 2,400,000 a year (Rs 200,000 a month) and adds rent to it.

The jump between Rs 50,000 and Rs 100,000 of monthly rent is not a typing error. With Rs 50,000 a month the extra tax is Rs 96,000, a rate of 20% on the taxable rent. At Rs 100,000 a month the rent takes salary down to 71.4% of taxable income, below the 75% needed for the salaried slabs, so the whole income moves to the non-salaried slabs and the extra tax is Rs 558,000. Taxable rent of up to Rs 799,999 keeps this salary on the salaried slabs. Because of this rule it is worth planning rent, deductions and who owns the property before the year ends. See the salary tax calculator for the same test on other income, and the business income tax calculator if your main income is a business.

Report your rent on your return under income from property, claim the deductions, and credit the tax your tenants withheld using the withholding statements they provide. File by September 30 after the tax year unless the FBR extends the date. Sale of the property itself is a separate matter: see the property transfer tax calculator. The deemed rental income tax on idle property (section 7E) no longer applies from July 1, 2026.