Renting Out Property: Understand Tax Deductions

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

Deductible Expenses:

• Repair and Maintenance: Costs incurred for repairs and annual building maintenance are deductible upto 20%.
• Building Insurance:?Premiums paid for property insurance can be deducted.
• Property Tax:?Property taxes paid on the rental building are deductible.
• Loan Interest: Interest paid on loans taken to purchase/build the rental property is deductible.
• Legal Expenses:?Legal fees associated with the property transfer (e.g., court fees, stamp duty) are deductible if incurred during the rental period.
• Other Expenses: You may be able to deduct other reasonable expenses not listed above up to 4% of annual rent.

Filing Your Tax Return:

• Carefully track and retain receipts for all deductible expenses.
• The remaining rental income after deducting expenses is subject to normal income tax.
• Filing your return accurately can help you avoid overpaying or underpaying taxes.

Benefits:

• Claiming deductions can significantly reduce your tax burden on rental income.
• Proper record-keeping ensures you have the documentation to support your deductions.

Conclusion:

Understanding rental property tax deductions can save you money and ensure you are filing your return correctly. Consult US for specific advice on your situation.

This article was published at Tax Savings on Property Rent Income by Deducting Expenses