If a property is owned jointly by several people, how are rent and gains taxed?

When several people own one property in fixed shares, the Income Tax Ordinance, 2001 taxes each of them separately on their own share. The owners are not treated as a single taxpayer. This is common when brothers and sisters inherit a family house and rent it out, or when a husband and wife buy a flat together. The rules below are from the Ordinance as amended to 30 June 2026.

What does the law say?

Section 66 is short. Where any property is owned by two or more persons and “their respective shares are definite and ascertainable”:

• Section 66(1)(a): the owners are not assessed as an association of persons (AOP) in respect of the property; and
• Section 66(1)(b): each person’s share in the income from the property for a tax year is taken into account in computing that person’s own taxable income for the year.
• Section 66(2): the section does not apply in computing income chargeable under the head “Income from Business”.

Rent itself is charged by section 15: rent received or receivable in a tax year is chargeable under the head “Income from Property”. Section 15A then allows deductions, such as a repairs allowance equal to one-fifth of the rent (section 15A(1)(a)) and any local rate or tax paid to a local authority or government (section 15A(1)(c)).

A gain on selling the property is charged by section 37 under the head “Capital Gains”, computed as consideration received (A) minus cost (B).

How does it work in practice?

1. Work out the property’s income for the year: rent under section 15, less the deductions allowed by section 15A.
2. Divide that income by each owner’s share.
3. Each owner includes their share in their own return, alongside any salary, business or other income they have, and pays tax at the rates that apply to them.

The same logic applies to a sale. Each owner’s share of the consideration and of the cost gives that owner’s share of the gain. Section 66 speaks of “the income from the property” and excludes only the business head. It does not mention capital gains separately.

Worked example (illustrative figures)

Three siblings in Multan, Kamran, Sadia and Farah, own an inherited house. The shares recorded in the title are Kamran 40%, Sadia 30% and Farah 30%. The house is let for Rs. 150,000 a month, and the siblings pay Rs. 60,000 property tax to the provincial government during the year.

Step 1: income from the property

• Annual rent: Rs. 150,000 x 12 = Rs. 1,800,000
• Repairs allowance, one-fifth of rent: Rs. 1,800,000 / 5 = Rs. 360,000
• Provincial property tax paid: Rs. 60,000
• Income from property: Rs. 1,800,000 - Rs. 360,000 - Rs. 60,000 = Rs. 1,380,000

Step 2: split by share

Owner	Share	Rent	Repairs allowance	Property tax	Income in own return
Kamran	40%	Rs. 720,000	Rs. 144,000	Rs. 24,000	Rs. 552,000
Sadia	30%	Rs. 540,000	Rs. 108,000	Rs. 18,000	Rs. 414,000
Farah	30%	Rs. 540,000	Rs. 108,000	Rs. 18,000	Rs. 414,000
Total	100%	Rs. 1,800,000	Rs. 360,000	Rs. 60,000	Rs. 1,380,000

Check: Rs. 552,000 + Rs. 414,000 + Rs. 414,000 = Rs. 1,380,000.

Each sibling then adds their figure to their own income for the year. Kamran, who also has a salary, adds Rs. 552,000 to his return. Farah, who has no other income, reports only her Rs. 414,000. None of them files an AOP return for the house.

If they later sell. Suppose the siblings sell a plot they had bought together, in the same shares, for Rs. 30,000,000, and its cost was Rs. 18,000,000. The gain is Rs. 12,000,000. Kamran’s share is Rs. 4,800,000 and Sadia’s and Farah’s are Rs. 3,600,000 each. Each reports their own gain under section 37. The cost of inherited property raises separate questions, covered on the inherited property page.

What if …?

What if the shares are not definite? Section 66 applies only where shares are “definite and ascertainable”. If they are not, the section does not give this treatment. This page does not cover how such a case is then assessed.

What if the owners run a business from the property? Section 66(2) takes income under the head “Income from Business” outside the section, for example a guest house the siblings operate together.

What if the tenant deducts tax from the rent? Section 155 makes certain tenants deduct tax from rent. How that deduction is credited among co-owners is not addressed in section 66. See the tenant withholding page.

Common mistakes

• Filing as an AOP. Co-owners with definite shares are expressly not assessed as an AOP for the property.
• One owner reporting all the rent. Section 66(1)(b) puts each share in each owner’s return.
• Forgetting other income. Each share is added to that owner’s total income. It is not taxed in isolation.

What to check in the official text

Read section 66, sections 15 and 15A, and section 37 in the consolidated Ordinance amended to 30 June 2026. Each owner’s share comes from the title documents or the succession, which are governed by laws outside this corpus. Provincial property tax rates are also outside this site.