Rental Income Tax CalculatorTY 2026-27
FBR Pakistan · Tax Year 2026-27
Investing in properties is considered one of the safest investments in Pakistan and all over the world.
A buy-to-let generates good revenue, but this is not tax-exempt.
But don’t worry, you don’t have to do any complex calculations to find out how much you owe. We have developed this rental income tax calculator to fix all your problems.
What is Rental Income
The following are the rental incomes
- Advance rent received by the owner
- Monthly rent
- Security Deposits
- Tenants paid expenses for which he is not responsible.
This is considered rental income, and it is important to declare it on your tax return, even if it is your only source of income.
Understanding Withholding Tax
Before we directly jump into section 155 of the income tax ordinance, firstly lets understand what a withholding tax is.
Withholding tax is the advance amount paid by the source (Teanet)on behalf of the recipient(In our case, the realtor/landlord) to the government. Use our salary tax calculator to find withholding tax on salary income.
According to Section 155 of the Income Tax Ordinance, withholding tax is applied to income generated by renting out immovable assets, including land, building, furniture and fixtures.
Withholding tax on rental income varies from 7.5% to 20%, depending on the total gross amount.
Tax on Rental Income Pakistan
The rental income tax rates in Pakistan for Tax Year 2026-2027 (Finance Act 2025) are divided into two main categories: Individuals/AOPs and Companies.
As a rule of thumb, Non-Filers are charged double (100% more) the rate of Filers.
1. For Individuals & Association of Persons (AOP)
Tax is applied on the gross amount of rent based on the following progressive slabs according to FBR:
| Gross Annual Rent (PKR) | Tax Rate for Filers | Tax Rate for Non-Filers |
|---|---|---|
| Up to Rs. 300,000 | Nil (0%) | Nil (0%) |
| Rs. 300,001 to Rs. 600,000 | 5% of amount > Rs. 300k | 10% of amount > Rs. 300k |
| Rs. 600,001 to Rs. 2,000,000 | Rs. 15,000 + 10% of amount > Rs. 600k | Rs. 30,000 + 20% of amount > Rs. 600k |
| Above Rs. 2,000,000 | Rs. 155,000 + 25% of amount > Rs. 2M | Rs. 310,000 + 50% of amount > Rs. 2M |
2. For Companies
| Entity Type | Filer Rate | Non-Filer Rate |
| Company | 15% of Gross Rent | 30% of Gross Rent |
Allowable Deductions & Exemptions
You don’t have to pay tax on total rental income. The good news is that you can make the following deductions from your taxable income.
- Depreciation: You can deduct 20% from your total rental income for maintenance costs
- Property Tax: If any tax is imposed by the local or federal government on your property, you can also deduct it.
- Insurance: Insurance Cost is also deductible
- Interest on Loan: Interest paid to the bank or any other financial institution can be deducted from total income before tax.
- Operating Expenses: Around 4% of the deduction is allowed as an operating expense, such as rent collection.
Common Mistakes and How You Can Avoid Them
20% Tax Deduction: Many landlords and homeowners don’t know that they can deduct 20% in wear and tear from their total taxable income. You don’t even need any recipient/document to claim this.
Record Keeping: It is important to have recipients to deduct interests on loans, insurance or any other relevant expense. Otherwise, you won’t be able to claim a deduction.
Not filing Tax: It is mandatory to file your income tax return on rental income, even if it is the only source. Also, don’t combine salary or freelance income with rental income while submitting returns.
Bonus: You can also use our freelance tax calculator and salary tax calculator to calculate tax obligations.
How to Use Rental Income Tax Calculator
`1. Select Taxpayer Type: Choose between Individual/AOP or Company. This is crucial because companies are taxed at a flat rate, while individuals enjoy progressive tax slabs.
2. Choose Filer Status: Toggle between Active Filer and Non-Filer. Remember, according to FBR rules, Non-Filers are subject to a 100% higher tax rate (double the tax) on rental income.
3. Pick Your Rent Period: You can enter your rent either Monthly or Yearly. If you select Monthly, the calculator will automatically compute the total annual income to determine your tax bracket.
4. Enter Gross Rent: Input the total rent amount before any deductions. The calculator uses the latest 2026-2027 FBR tax slabs to ensure accuracy.
5. Review Your Results: Once you click "Calculate," the tool will provide a breakdown of your Total Annual Tax, the Monthly Tax deduction, and your actual Net Take-Home Rent.
Key Features
Real-Time Calculation Feature
Our tool stands out by offering a real-time calculation feature, ensuring you receive instant feedback based on your latest data. This accelerates the estimation process and eliminates the guesswork often associated with tax liabilities.
Access Without Registration
Our platform ensures that no registration is required for access, providing a seamless experience for all users. This convenience encourages homeowners and landlords to engage with their tax responsibilities proactively, without the burden of a formal registration process.
Precision and Accuracy
By providing you with precise figures, we help prevent the headache of unexpected tax bills or the frustration of chasing refunds. This level of efficiency is particularly beneficial to save time and focus on what truly matters.
