Your mortgage relief
Qualifying interest; saving depends on tax band
Qualifying mortgage interest reduces taxable income. It is not a refund of the mortgage repayment and it does not mean KRA pays KES 30,000 towards your mortgage each month. The current limit is KES 360,000 per year, equivalent to KES 30,000 per month.
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Check the property and lender
KRA describes the deduction for borrowing from qualifying institutions specified in the Income Tax Act to purchase or improve premises occupied by the borrower for residential purposes. Confirm both the loan purpose and lender qualification. Do not assume every SACCO, private lender, land loan or rental investment qualifies.
Separate interest from capital
Use a lender statement showing the interest actually charged and paid for the relevant period. If the payment is KES 50,000 but only KES 28,000 is qualifying interest, the starting deduction is KES 28,000, not KES 50,000. Principal repayments reduce your debt but are not mortgage interest.
| Qualifying monthly interest | Deduction within the monthly cap | Illustrative saving at 30% |
|---|---|---|
| 20,000 | 20,000 | 6,000 |
| 28,000 | 28,000 | 8,400 |
| 40,000 | 30,000 | 9,000 |
These savings assume the whole deduction falls in the 30% band and enough taxable income is available. A deduction crossing bands produces a different result. KES 9,000 is therefore an example, not a universal maximum tax saving for every earner.
Documents for payroll
Provide the loan agreement, lender interest statement and evidence supporting owner occupation and the loan’s purpose. For joint borrowing, explain ownership, liability and who paid the interest. Two borrowers should not each claim the full interest on the same payment.
A practical payslip check
Find the mortgage deduction in the calculation of taxable pay, before PAYE is calculated. Check that it has not also been entered as a separate tax credit. If you pay the lender directly, do not subtract the payment again from payslip cash unless payroll actually collected it. Taxable-pay deductions and cash deductions are different entries.
Review the year as a whole
Retain the annual lender certificate and reconcile monthly claims against it. If interest changes during the year, update payroll. Use the rules applying to the year of income when correcting an older return rather than applying today’s limit retrospectively.
The mortgage relief calculator can illustrate the tax effect, while the PAYE guide explains the calculation order.
Sources and review date
Reviewed on 21 October 2026. Use the rules for the period being calculated; historical payslips may use different limits.