Botswana Rental Income Tax Guide 2026

Overview — Taxation of Rental Income

Rental income derived from letting immovable property in Botswana is taxable. For individual landlords, net rental income (gross rent less allowable deductions) is added to other income and taxed at the progressive IIT rates (0–25%). For corporate landlords, rental income is taxed at the corporate rate of 22% (or applicable preferential rate).

Allowable Deductions

Landlords can deduct expenses wholly and exclusively incurred in earning rental income:

• Mortgage interest: Interest on loans used to acquire or improve the rental property
• Municipal rates and taxes: Annual property rates paid to the local council
• Repairs and maintenance: Costs of keeping the property in a habitable condition (not capital improvements)
• Insurance premiums: Building and landlord insurance
• Managing agent fees: Fees paid to estate agents for property management
• Legal and professional fees: Costs of lease agreements, tenant disputes, and accounting
• Utilities: Water, electricity, and refuse charges if paid by the landlord
• Advertising: Costs of advertising the property for rent
• Depreciation: Capital allowances on the building (2% per annum for commercial buildings) and furniture/fittings

Non-Deductible Expenses

The following costs are not deductible against rental income:

• Capital improvements: Extensions, renovations, or major upgrades (these are added to the cost base for CGT purposes)
• Principal repayments: Repayment of the loan principal (only interest is deductible)
• Personal use: Costs relating to periods of personal use of the property
• Own labour: The value of the landlord's own time and labour

Rental Losses

If allowable deductions exceed rental income in a tax year, a rental loss arises. This loss can generally be offset against other income (e.g., salary or business income) in the same year, reducing the overall tax liability. If the loss exceeds other income, the unrelieved loss can be carried forward to future tax years. Anti-avoidance rules may restrict loss relief where the property is rented below market rates (e.g., to family members).

VAT on Rent

Residential rent is exempt from VAT. This means landlords do not charge VAT on residential rental income and cannot reclaim input VAT on expenses relating to the residential property. Commercial rent (rent of commercial property) is subject to VAT at 14% if the landlord's total taxable turnover exceeds the VAT registration threshold of BWP 500,000.

Record Keeping

Landlords must maintain proper records of all rental income and expenses, including:

• Tenancy agreements and rent receipts
• Invoices and receipts for all deductible expenses
• Mortgage statements showing interest paid
• Records of capital improvements (for CGT purposes)

Records should be retained for at least five years after the relevant tax year.

FAQs

Is rental income taxed differently for non-residents?

Non-residents earning rental income from Botswana property are taxed at the same IIT rates as residents on their net rental income. A withholding tax regime may apply to ensure collection.

Can I deduct the cost of a new roof?

A new roof is typically a capital improvement and is not deductible as a repair. It should be capitalised and may qualify for capital allowances over the useful life of the asset.

Do I need to register for VAT as a landlord?

Only if you are renting commercial property and your total taxable turnover exceeds BWP 500,000. Residential rent is exempt from VAT.

Disclaimer

This guide provides general information about rental income taxation in Botswana for 2026. Tax laws and rates may change. Always consult a qualified tax professional or BURS for advice specific to your circumstances. InvestmentKit does not provide tax advice.