Tax on Rental Income From Property
Rent from property you own is taxable income in Pakistan. This surprises a number of landlords, particularly those who let a single flat or shop and think of it as a private arrangement.
The tenant may be withholding tax already
Certain categories of tenant are required to deduct tax when they pay rent and hand it to the government on your behalf. Companies, government bodies and other prescribed persons fall into this group. An individual renting a house for their own family generally does not.
If tax is being withheld from your rent, ask the tenant for the deduction certificate. That is your evidence for claiming it in your return, and without it you may end up paying tax on the same rent twice.
It goes in your return either way
Whether or not anyone withheld tax, the rent is income and belongs in your return. Property is visible. A flat that generates rent and a wealth statement that never mentions any rental income is an obvious mismatch.
What you can deduct
Income from property is not taxed on the gross rent alone. The Ordinance allows deductions against it, and historically these have included:
- A repairs allowance calculated as a proportion of the rent
- Property tax and other local rates paid on the property
- Insurance premiums on the building
- Interest on money borrowed to acquire, construct or improve the property
- Ground rent, where applicable
- Certain collection and administration costs
The exact list and the way the repairs allowance is computed have been amended over the years, and the treatment of rental income has moved between separate and normal tax treatment more than once. Confirm the rules for the tax year you are filing.
Advance rent and deposits
A large advance covering several years is not always taxed entirely in the year you receive it, and a refundable security deposit is generally not rent at all. These are the points landlords most often get wrong, in both directions. If a tenant has paid you a substantial sum up front, it is worth getting the treatment right rather than guessing.
Last updated: 28 July 2026
Sources
- Income Tax Ordinance 2001, sections 15 and 15A (income from property and deductions)
- Income Tax Ordinance 2001, section 155 (deduction of tax on rent)
- FBR, withholding tax on property income, Federal Board of Revenue (fbr.gov.pk)
- PwC Tax Summaries, Pakistan income from property
This article gives general information about tax in Pakistan. It is not advice on your own situation. Rules and rates change, sometimes in the middle of a year. Before you act on anything here, check the current position with the FBR or a registered tax practitioner.
