Rental Income Tax Reminder
Rental Income = Total Rent Received
Taxable Rental Income = Rental Income − Allowable Expenses
Rental Income Tax = Taxable Rental Income × Applicable Tax Rate
Exercise 1 – Basic Rental Income Tax
Mr. Jean owns a commercial building in Kigali.
During the year 2025 he received rental income of:
Annual Rental Income = 18,000,000 FRW
The following expenses were incurred:
| Expense |
Amount (FRW) |
| Building Maintenance |
1,000,000 |
| Security Services |
600,000 |
| Insurance |
400,000 |
Required
- Calculate Total Expenses.
- Calculate Taxable Rental Income.
- Calculate Rental Income Tax.
- Explain why expenses are deducted before tax calculation.
Exercise 2 – Building Financed by Bank Loan
Ms. Alice constructed rental apartments using a bank loan.
| Description |
Amount (FRW) |
| Annual Rental Income |
36,000,000 |
| Bank Interest Paid |
4,500,000 |
| Maintenance Expenses |
1,200,000 |
| Insurance |
800,000 |
| Security Expenses |
500,000 |
Assume that bank interest is an allowable expense.
Required
- Calculate Total Allowable Expenses.
- Calculate Taxable Rental Income.
- Calculate Rental Income Tax.
- Explain the treatment of Bank Interest.
- Explain whether loan principal is deductible.
Exercise 3 – Multiple Properties
Holy K owns the following rental properties:
| Property |
Annual Rental Income |
| Apartment Building |
24,000,000 |
| Commercial Shops |
18,000,000 |
| Warehouse |
12,000,000 |
Annual Expenses:
| Expense |
Amount (FRW) |
| Maintenance |
2,500,000 |
| Security |
1,000,000 |
| Insurance |
800,000 |
| Bank Interest |
2,200,000 |
Required
- Calculate Total Rental Income.
- Calculate Total Allowable Expenses.
- Calculate Taxable Rental Income.
- Calculate Rental Income Tax.
- Prepare a simple Rental Income Statement.
Interview Questions
- What is Rental Income Tax?
- Who is required to pay Rental Income Tax in Rwanda?
- What expenses can be deducted before tax calculation?
- Can bank loan interest be deducted? Explain.
- Can loan principal repayment be deducted? Explain.
- What is Taxable Rental Income?
- When should Rental Income Tax be declared?
- What penalties may apply for late declaration?
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