The deadline for submitting declarations for the 2024 rental income is January 31, and RRA has emphasized the importance of using the exact rental amounts received to prevent unintended penalties.
Those renting out buildings, property improvements rented in whole or in part, or any other rented immovable property located in Rwanda, are encouraged to declare early.
The law determining the sources of revenue and property of decentralized entities stipulates that a person is liable for tax when rental income exceeds Frw180,000 per year, provided they are not registered under corporate income tax.
Property owners must have a written contract with the tenant bearing the signatures of both parties.
Karasira Ernest, Assistant Commissioner in charge of the Provincial and Decentralized Revenue Division at RRA, emphasized the importance of using genuine contracts during tax declarations to avoid penalties.
"Property owners are required to provide accurate information as the basis for the tax amounts declared and paid. For example, issuing a contract indicating that a tenant pays Frw 200,000 in rent while actually receiving Frw500,000 would be misleading, violating the law. Both property owners and tenants should have a truthful agreement where the actual payment amounts are clearly reflected in the documents or receipts issued after payment," he said.
Karasira urged property owners to declare the required tax and, if possible, pay immediately or by the January 31 deadline.
'Property owners are urged to act swiftly to avoid penalties for missing the deadline. Secondly, I remind everyone to provide accurate declarations and avoid submitting false information. If it is later discovered that the data provided was inaccurate, not only will the due tax be paid, but additional penalties will also be imposed,' he added.
Penalties
The law provides a penalty of 40% of the tax due for late declarations or providing false information. Unpaid taxes are also subject to a 1.5% monthly interest and an additional charge of 10% of the tax due. However, this surcharge cannot exceed Frw100, 000.
How rental income tax is calculated
When calculating rental income tax, 50% of the rental income received during the year is exempt from taxation, as it is considered a maintenance cost for the property. Interest on bank loans related to the rented property is also deducted from taxable income.
The remaining taxable amount is subject to a 0% rate for annual rental income from Frw1 to Frw180,000; 20% for annual rental income from Frw180,001 to Frw 1 million; and 30% for annual rental income exceeding Frw 1 million.
The declaration is made through the RRA website, where taxpayers must provide accurate rental details including tenant's name, the rental period, monthly payment, and the total amount paid throughout the year.
The system automatically calculates the tax payable based on the information provided.
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