Rental Income Tax

Legal Reference:

The rental income tax is governed by Law Law No. 048/2023 of 05/09/2023 determining the source of revenue and property of decentralized entities.

Who has to pay?

The rental income tax is paid by any individual who earns income from renting out the fixed assets located in Rwanda, including land, buildings and improvements.

Rental income tax base

The rental income tax is charged on income generated by an individual or any other person who is not subject to corporate tax from a rented immovable property located in Rwanda.

Taxable rental income

Rental income tax is charged to the following:

1° income from rented buildings in whole or in part;

2° income from rented improvements in whole or in part;

3° income from any other rented immovable property located in Rwanda.

Rental income tax rate

The rental income tax rate is determined as follows:

1° zero percent (0 %) for an annual rental income from one Rwandan franc (FRW 1) to one hundred eighty thousand Rwandan francs (FRW 180,000);

2° twenty percent (20 %) for an annual rental income from one hundred eighty thousand and one Rwandan francs (FRW 180,001) to one million Rwandan francs (FRW 1,000,000);

3° thirty percent (30 %) for an annual rental income above one million Rwandan francs (FRW 1,000,000).

Rental income tax computation method

The taxable rental income is obtained by deducting from the gross rental income fifty percent (50%) considered as the expenses incurred by the taxpayer on maintenance and upkeep of the rented property.

When the taxpayer produces the proof of bank interest payments on a loan for the construction or purchase of a rented property, the taxable rental income is determined by deducting from gross rental income fifty percent (50%) considered as the expenses incurred for upkeep of the property plus actual bank interest paid from the beginning of the rental period within the tax period.

Date of rental income tax declaration

A person who earns a taxable rental income files a rental income tax declaration not later than 31st January each year.

Contents of rental income tax declaration

The rental income tax declaration must show details of any rented immovable property located in Rwanda including the tax due assessed by a taxpayer himself/herself.

Except for electronic tax declaration, the rental income tax declaration is signed by the taxpayer or his/her proxy.

Rental income tax payment

The rental income tax assessed by a taxpayer himself/herself is paid to the tax administration not later than 31st January of the year following the concerned tax period.

Appeal procedures

Appeal procedures are the followings:

• The taxpayer who is not satisfied with the calculated rental income tax, as it is indicated in the assessment notice, can submit a written and signed objection, within thirty (30) days, to the concerned decentralized entity.
• The decentralized entity must communicate its decision in writing within sixty (60) days. If not, the objection of the taxpayer is deemed to be valid.
• If the taxpayer is not satisfied with the decision of the decentralised entity, he can send a written and signed appeal to the competent court within thirty (30) days following the receipt of the decision.  
• If the taxpayer wins the case, the concerned decentralized entity must pay back the overpaid tax within 1 month after that the decision has been taken.

Notes:

• The appeal shall not suspend the obligation to pay tax, interest and penalties;
• When the rental contract is expired or amended, the taxpayer must notify the decentralized entity within thirty (30) days.