Tax Savings on Property Rent Income by Deducting Expenses

Renting Out Property: Understand Tax Deductions

This article explains the deductions you can claim when filing taxes on rental income in Pakistan.

Maximizing Tax Benefits:

• Reduce your tax burden by claiming allowable expenses against your rental income.

Deductible Expenses:

1. Repair and Maintenance: Annual costs incurred for repairs and maintenance of the property (e.g., 20% for repairs and maintenance).
2. Building Insurance: Premiums paid for property insurance.
3. Property Tax: Taxes paid on the rental property.
4. Loan Interest: Interest paid on a loan taken to purchase the rental property.
5. Legal Fees: Legal expenses incurred during the transfer of the property (e.g., court fees, stamp duty).
6. Other Expenses: Any other legitimate expenses related to the rental property.

Tax Calculation:

• Deduct the allowable expenses from your total rental income.
• Apply the relevant tax rate to the remaining amount.

Benefits of Proper Recordkeeping:

• Maintain records of all expenses for claiming deductions.
• Accurate recordkeeping helps avoid overpaying or underpaying taxes.

Filing Returns:

• File your tax return to claim deductions and pay any remaining tax.

Conclusion:

Understanding tax deductions for rental income can significantly reduce your tax liability. Keep proper records and consult Us for specific tax advice.