Owner-occupied mortgage interest deduction, capped at KES 30,000 a month.
Allowable monthly deduction
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PAYE saved (monthly)
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PAYE saved (annual)
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A deduction most homeowners forget to claim
If you took a loan to buy or build the home you live in, Kenyan tax law lets you knock the interest off your taxable employment income before PAYE is worked out. It is one of the few genuine tax breaks available to a salaried homeowner, and a surprising number of people never tell their employer or KRA they qualify. This is a deduction from taxable pay, not a cash rebate, so its value depends on the tax band the relief pulls income out of. The higher your marginal band, the more each shilling of interest is worth to you. This tool shows the allowable deduction and the actual PAYE it saves you, month and year.
The ceiling, and what happens above it
The relief is capped. The calculator applies a limit of KES 30,000 of interest a month, which is KES 360,000 a year. Pay more interest than that and only the first KES 30,000 counts. Pay less and you claim the actual figure. The deduction is also restricted to interest on a single owner-occupied residence, and the loan must come from an approved institution, so a private family loan or interest on a rental property does not qualify. These limits and conditions are the structure to understand. The exact cap has moved in recent Finance Acts, rising from KES 25,000 not long ago, so treat KES 30,000 as the figure modelled here and confirm the current ceiling with the KRA.
A worked example at KES 35,000 interest on KES 150,000 pay
Take the default. You pay KES 35,000 a month in mortgage interest and earn KES 150,000 in taxable pay. The interest exceeds the cap, so the allowable deduction is held at KES 30,000. That KES 30,000 comes out of income sitting in the 30 percent band, the band that covers most of a KES 150,000 salary under the rates this calculator applies. So the PAYE you save is 30 percent of KES 30,000, which is KES 9,000 a month. Over a year that is KES 108,000 of tax you keep rather than remit.
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Why the saving is not always 30 percent
The calculator does not just multiply the deduction by a flat rate. It recomputes PAYE on your pay with and without the deduction and reports the difference, which is the honest way to do it. For most salaries the whole deduction falls inside the 30 percent band and the saving is a clean 30 percent of the allowed interest. But if your taxable pay is low enough that the deduction pushes part of your income down into the 25 percent or 10 percent bands, the saving per shilling drops accordingly. That is why a high earner gets the full KES 9,000 from a KES 30,000 deduction while someone near the band edge may save less. The progressive structure is stable and safe to rely on, even though the specific band thresholds should be checked against current KRA tables.
Who benefits and how to actually claim it
This tool is for salaried homeowners with a mortgage on the house they live in, and for anyone weighing whether buying makes tax sense against renting. The practical step people miss is the paperwork: to get the relief through payroll you give your employer the lender's certificate of interest, or you claim it when you file your annual return. Without that, the deduction never reaches your payslip and you overpay PAYE all year. One common error is trying to claim interest on a buy-to-let property, which does not qualify under the owner-occupied rule, though landlords have a separate route through rental-income taxation. Always confirm both the cap and your eligibility with the KRA, since these provisions have been amended repeatedly.
Can a couple each claim mortgage interest relief?
The relief attaches to the owner-occupied residence and the person servicing the qualifying loan, and it is restricted to one residence. Where a couple jointly owns and jointly services a mortgage, how the interest and the relief are shared can get technical, so do not assume you can both claim the full KES 30,000 on the same house. Check the specific position with the KRA before splitting a claim.
Does relief cover the whole mortgage payment or just the interest?
Only the interest portion qualifies, never the capital repayment. In the early years of a mortgage your monthly payment is mostly interest, so the deduction is easy to fill, but as the loan ages and the interest share shrinks, you may pay less than the cap and claim only the actual interest. Ask your lender for an annual interest statement so you claim the right figure each year rather than the full installment.