Ali Baba - I really wish you can address the points that I put out to you and alma. Since we are all investors in wazua, give us your honest thoughts. 1. ROI 2. Implication on mortgaged houses with tenants.

Assume KRA has netted the Landlords and they are paying taxes .

@bachuma you are on the right track. It's all about ROI and obviously the guys getting hit hard are those who like hoarding properties around the city center. Of course those are going to be easier to track. So poleni sana.

If you have been earning 100k at work, bought a few rental flats using a bank loan. Please add your rental income to your tax bill. Unless of course its a company. I'm sure it isn't.

That's my take but knowing how Kenya works I won't hold my breath on that happening.

So you may get a higher ROI in areas outside the norm flat buying in Nairobi.

The good thing is that for the first time guys are going to take a calculator out before buying properties instead of their hearts as is the norm in the current property market. Where people just buy stuff coz its land. Leading to property prices in Kenya higher than prime property in Florida. eish!

The next area will be capital gains on those hoarding property. I'm sure the next KRA guy will implement that.

For those thinking that you can just push up rents, take out your calculator again. Raise rents, raise your taxable income. At the same time run the risk of not renting out your property as I doubt your tenant would be willing to pay your taxes. You might push property prices so high people decide its better to buy than rent. So there goes your golden goose.

Those who have properties had better be careful on how they report their rental properties. The question will always be asked of you, is it income tax or is it a business tax. You pray its the later coz the KRA fellow you're dealing with may just make you pay 30%.

As for Kenyans in the diaspora. I'm not privy to other countries. But in the USA double taxation does not occur if I can prove I paid taxes in the foreign country. So if I pay my taxes in Kenya, I won't have to pay them in my taxes in the USA. Infact I may just declare loses and get rebates for that.

That's my take. I have no problems being corrected.

It'd be totally inappropriate for the tax to be based on gross income. Everyone knows that there are those who have huge mortgages to pay. It is a big possibility that some landlords will hide behind companies and have fictitious expenses to minimize the taxes. Kenyans know how to beat systems and I have feeling as we speak someone is devising ways and means of beating this.

thats why am proud to be kenyan !

On the issue of increasing in rent. I think most landlords will. I had a stall in tao and it happened to me when gova introduce vat on commercial properties. The landlord just past the vat on our rents. So you either take it or leave.

Look at Nyayo Highrise Embakasi. The rents were at 25-27 the other day for 3 bed flat. Because of the new road, they have gone up to 28-30. You can argue that this is marginal. What a landlord will do is to increase rent marginally say by 3-5K to maybe 32K. He then works out his costs such that whatever he pays has a minimal impact on him.

Again demand and supply comes into play here. For one tenant rent of 32K may be high so he moves out. For another, that is the kind of rent he would be comfortable with.

Where I leave, my friends are prepared to pay 5 to 10k more. So they keep telling me to get them a house in my estate. Infact my landlord really wishes I move out as he knows he will get higher rent.

LONG TERM effect is that if there is LITTLE investment in this sector because of ROI, demand will be so high that rents will sky rocket. How may of us can afford to buy houses? It is really a catch twenty twenty and the victim might end up being you and me.

Has the tax structure outsmarted or evolved faster than our brains?

To survive ecocomic regimes businesses thrive on innovation and crafting business models that factor government legislation as business risks. Kenyans need to be smart and burn the midnight oil to think beyond the obvious.
No big deal in paying rental taxes...reform and re-organise informal businesses and pay taxes at your leisure and as desirable smartly within the law, period.

They invest where they get reasonable returns. Rents where Kiyosaki comes from are not same with here in kenya where you invest 4.6m to get 10k per month.

The little tax i know, if u own a huge property portfolio, how about forming a company and claiming depreciation on property as an expense, netted off against rental income in calculating taxable income as a way of tax avoidance (not evasion)

Ali- If it were you would you invest 10million to get 28k as per my Greenspan example. Its very practical. I dont think Koyosaki would be impressed.

BAICHUMA GATE: You are still mistaken.When you invest 10m and get rent of shs 45,000/month.Your profit before tax =45000*12=shs 540,000 per year.Then deduct your shs5K/month expenses=5000*12=60,000,therefore net profit/year=shs 540,000-60,000=shs480,000.Its not bad!!! Then tax at 30%=shs 144,000.Your profit after tax=shs 480,000-144,000=shs336,000 per year for life.Not a bad investment.TBill rates would change from say 20% to 3% ....and hence very unreliable.I would invest in a house.Plus,I don't know why we are arguing.tax on landlords is not new.It has been in Income Tax Act Cap 470 for a longtime....only that people like you chose to evade.Well,the 40 days are over my friends.Time to talk to Njiraini.....