Eligibility Criteria for Mortgage Interest Relief
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Under the Income Tax Act, mortgage interest relief is available to a resident individual on interest paid on a loan from a specified financial institution to buy or build an owner-occupied residence.
The relief works as a deduction against your taxable income for the interest paid on the home loan. It helps homeowners reduce the tax due on their annual return, claimed through the iTax portal.
The key conditions are that the property is your owner-occupied home and the loan is from a specified financial institution. Confirm the current rules and the list of specified institutions with KRA.
| Criterion | Requirement |
|---|---|
| Residency | Resident individual for tax purposes |
| Property | Owner-occupied residence |
| Loan source | Specified financial institution |
Check your relief position on the iTax portal before filing your return, and keep the lender interest certificate to support the claim.
Residency and Ownership Requirements
You qualify as a resident individual using the home as your owner-occupied residence, with the loan from a specified financial institution. Residency for tax purposes follows the usual tests under the Income Tax Act, so confirm your status if you spend significant time outside Kenya.
The relief is for interest on the loan for your own home, not for an investment or rental property. Register your KRA PIN and use iTax to claim the relief on your return.
Property Ownership Conditions
The property must be your owner-occupied residence and the loan must be from a specified financial institution. You should be able to show ownership and that you occupy the home.
- Be a resident individual.
- Use the home as your main residence.
- Hold the loan with a specified financial institution.
- Claim only the interest, not the principal.
Rental or investment property does not qualify. Submit proof such as the loan agreement, the lender interest certificate and evidence of ownership and occupation so the claim can be verified.
Qualifying Mortgages and Loans
Only loans from a specified financial institution qualify, which includes registered banks and other institutions listed for this purpose. The loan must fund your owner-occupied home. Confirm the current list of specified institutions with KRA before relying on a particular lender.
Focus on loans secured for your own residence. Lenders provide an interest certificate for your iTax filing. Verify the lender's status so the deduction is not disallowed.
| Lender type | Examples | Typical processing |
|---|---|---|
| Banks | Registered commercial banks | Varies by lender |
| SACCOs and others | Where listed as specified institutions | Varies by lender |
Keep your loan agreement and lender interest certificate in case KRA asks to verify the claim under the Income Tax Act.
Registered Financial Institutions
Registered banks and other specified financial institutions qualify. Check KRA's guidance on which institutions are specified before applying, since only loans from those institutions support the relief. Developer or informal financing does not qualify.
These institutions issue the interest certificate you need for your annual return. Request it early so you can claim within the deadline.
Home Construction and Purchase Loans
Both a loan to purchase and a loan to build an owner-occupied residence can qualify, provided the property is your own home and the loan is from a specified financial institution. Claim the interest up to the cap on your return, supported by the lender certificate.
For construction, the interest you can claim relates to the interest actually paid in the year. Keep the lender statements and any supporting documents so the figures can be verified.
Maximum Relief Limit
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The maximum mortgage interest relief is KES 30,000 per month, which is KES 360,000 per year. This was raised from the previous KES 25,000 per month (KES 300,000 per year) by the Tax Laws (Amendment) Act 2024. The relief applies to interest paid, not the principal. Confirm the current cap with KRA.
You deduct the lower of the actual interest paid and the cap. So if you pay KES 40,000 a month in qualifying interest, you deduct KES 30,000; if you pay KES 20,000, you deduct the full KES 20,000. Only the interest portion qualifies, so use the lender's split of principal and interest.
Review your loan statement to separate principal and interest. Your lender provides an annual interest certificate confirming the deductible interest. Submit this via the iTax portal when you file.
| Annual interest paid | Deductible interest |
|---|---|
| KES 200,000 | KES 200,000 |
| KES 360,000 | KES 360,000 |
| KES 500,000 | KES 360,000 (capped) |
The deduction reduces your taxable income, so its value depends on your marginal tax band. Confirm your relief position on the return and keep the lender certificate.
Required Documentation
KRA expects the lender interest certificate, the loan agreement, and supporting statements when you claim. These prove your mortgage interest relief on the return. Without them the deduction may be disallowed on review.
Prepare a checklist for a smooth filing. Start with the interest certificate from your lender, then the loan agreement, and proof of ownership and occupation of the home.
- Lender interest certificate for the year of income.
- Loan agreement with the specified financial institution.
- Statement showing the split of principal and interest.
- Proof of ownership and occupation of the property.
Common issues come from missing interest certificates or incomplete statements. Make sure the documents match your return entries so the claim is not disallowed.
Loan Statement and Interest Certificate
Download the interest certificate from your lender for the year of income. It sets out the interest portion eligible for relief. Log into your lender's portal or request it from the branch.
- Obtain the interest certificate from your lender.
- Confirm it shows your name, PIN and the interest paid.
- Separate interest from principal using the statement.
- Keep the document for your iTax claim and any review.
For example, if total payments for the year were KES 480,000 and the interest portion was KES 360,000, you can claim up to the cap of KES 360,000. Always distinguish interest from principal so the claim is accurate.
Calculating Your Relief Amount
The relief is the lower of the actual annual interest paid and the cap of KES 360,000 per year (KES 30,000 per month). Use the interest figure from your lender certificate. Confirm the current cap with KRA before filing.
Start by obtaining your interest certificate from the specified financial institution. Separate the interest from the principal using the loan statement. Only the interest portion qualifies for the deduction.
For example, consider a year in which your lender certificate shows the interest below. The annual interest total is what you compare against the cap.
| Annual interest paid | Cap | Deduction allowed |
|---|---|---|
| KES 360,000 | KES 360,000 | KES 360,000 |
| KES 250,000 | KES 360,000 | KES 250,000 |
| KES 420,000 | KES 360,000 | KES 360,000 |
So a homeowner whose certificate shows KES 360,000 of interest deducts the full KES 360,000, while someone paying KES 250,000 deducts the actual KES 250,000. The deduction reduces taxable income, and its cash value depends on your marginal band. Cross-check the figure with your loan statement.
Step-by-Step Calculation Guide
Gather the lender interest certificate and the loan statement. Identify the interest paid in the year of income, separate from the principal. Sum the interest for the year.
Apply the rule: take the lower of the total interest and KES 360,000, then enter it on your return. For example, KES 360,000 or more of interest gives the full KES 360,000 deduction; less than that gives the actual interest. Enter the figure on your return during filing.
- Download your interest certificate and loan statement from the lender.
- Exclude principal repayments and fees.
- Confirm all figures are in shillings for the year of income.
- Where a property is co-owned, apportion the interest accordingly.
If the home is jointly owned, apportion the interest between the owners. This keeps the claim consistent with KRA's rules on your annual return.
Filing Process on iTax Portal
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File through itax.kra.go.ke by opening the individual return, going to the reliefs or deductions section, entering the mortgage interest figure and uploading the lender certificate. The process is quick once your documents are ready.
The portal simplifies filing for employees. Verify your details first to avoid errors on your return. You can access iTax from a computer or mobile device.
Follow these steps to enter the deduction accurately and file before the 30 June deadline.
- Log into iTax using your PIN.
- Select File Return from the dashboard.
- Choose the individual return form.
- Verify your income details.
- Open the reliefs or deductions section and enter the interest figure, up to KES 360,000 for the year.
- Upload the scanned interest certificate within the portal size limit.
- Review and submit before the deadline.
The system applies the deduction based on your entry, so check it against your lender certificate. Confirm the current cap with KRA, as figures can change between Finance Acts.
Common Errors and Pitfalls
The most common error is claiming the principal repayment instead of the interest. Only the interest qualifies. Use the lender interest certificate to claim correctly under the Income Tax Act.
Review your loan statement to separate principal from interest. Other frequent mistakes involve rental properties and missing documents, which can lead to the deduction being disallowed on review.
- Claiming for a rental or investment property. Provide proof the home is owner-occupied.
- Missing the lender interest certificate. Obtain it before filing on iTax.
- Claiming the principal as well as the interest. Only interest qualifies.
- Requesting the certificate too late to meet the deadline. Ask for it early.
- Co-owners both claiming the full interest. Apportion it between owners.
Double-check the loan agreement and the interest certificate so your claim is accurate and supported.
Deadline and Penalties
File your individual return by 30 June each year. Late filing can attract penalties and interest under the Tax Procedures Act. Confirm the current penalty position with KRA, as the rules can change.
Prepare your interest certificate and loan statement early so you can file in good time. Filing on iTax before the deadline avoids late-filing penalties and keeps your relief claim in order.
Understanding the Filing Deadline
The individual income tax return is due by 30 June each year. This is where you claim the mortgage interest deduction and reconcile your reliefs. Register your PIN on iTax if you have not already.
Even where most of your tax is collected through PAYE, you still file the return to capture the deduction and claim any refund due. Keep records in case KRA asks to verify the claim.
Amended Returns
If you spot an error after filing, you can amend the return through iTax. Correct mistakes such as a mis-stated interest figure or ownership detail, and keep the supporting documents. Confirm the time limits for amendments with KRA.
Frequently Asked Questions
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What is mortgage interest relief on a Kenyan tax return?
It is a deduction available to a resident individual who has a loan from a specified financial institution to buy or build an owner-occupied home. You can deduct the interest paid, up to KES 30,000 per month (KES 360,000 per year), which reduces your taxable income. Confirm the current cap with KRA.
Who is eligible to claim it?
A resident individual with a qualifying loan from a specified financial institution for a home they occupy themselves. The property must be your owner-occupied residence, not an investment or rental property, and you must be the borrower.
How do I calculate the relief?
Take the lower of the actual annual interest paid and KES 360,000, and enter that on your return under reliefs on iTax. Use the interest figure from your lender certificate, and exclude any principal repayments and fees.
What documents are required?
You need the lender interest certificate showing the interest paid, the loan agreement, proof of ownership and occupation of the home, and your PIN. Keep these for KRA in case the claim is reviewed.
Has the cap changed?
Yes. The cap was raised from KES 25,000 per month (KES 300,000 per year) to KES 30,000 per month (KES 360,000 per year) by the Tax Laws (Amendment) Act 2024. Confirm the current figure on the KRA iTax portal before relying on it.
What are common mistakes to avoid?
Common pitfalls include claiming the principal instead of the interest, claiming for a non-owner-occupied property, missing the lender interest certificate, or both co-owners claiming the full interest. Verify the figures with your lender certificate and check your iTax entries before submitting.