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Impact of 30% rental income tax on housing development in Kenya
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kyt
#51 Posted : Friday, June 15, 2012 9:14:24 AM
Rank: Elder

Joined: 11/7/2007
Posts: 2,182
@Bachuma, thats why i think that this tax thing was hurried and may or may not work.
LOVE WHAT YOU DO, DO WHAT YOU LOVE.
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SG
#52 Posted : Friday, June 15, 2012 9:22:09 AM
Rank: Member

Joined: 4/5/2008
Posts: 30
Has the tax structure outsmarted or evolved faster than our brains? Sad

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.smile
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Ali Baba
#53 Posted : Friday, June 15, 2012 9:22:27 AM
Rank: Member

Joined: 8/29/2008
Posts: 573
BAICHUMA GATE: I think you are mistaken.The world over,no one would surpass investing in real estate for T Bills/Bonds.The interest rates vary all the time.Like in 2003,Tbill rates was so low.And I have told you before,no one stops investing because of taxes.Look you invest in T bills and such securities while accumulating enough capital to invest in real estate.Please read Robert Kiyosaki's Rich Dad's Guide to Investing---What the rich invest in and what the middle class invest in...The middle class invest they way you are arguing.The rich invest in real estate,and that's why they are rich.And please note all investment income is taxable.
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Bachuma Gate
#54 Posted : Friday, June 15, 2012 9:28:02 AM
Rank: Member

Joined: 3/26/2012
Posts: 280
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.
DOH
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  | | Edit by user: Friday, June 15, 2012 9:50 AM | Reason: Not specified
Ali Baba
#55 Posted : Friday, June 15, 2012 9:39:11 AM
Rank: Member

Joined: 8/29/2008
Posts: 573
BAICHUMA GATE: The ground rules are the same.And mind you,wherever you go to invest for decent returns are still taxable---unless you invest in drug trafficking.
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tonicasert
#56 Posted : Friday, June 15, 2012 9:39:33 AM
Rank: Member

Joined: 3/10/2008
Posts: 301
Location: Abu Dhabi
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)
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Ceinz
#57 Posted : Friday, June 15, 2012 9:41:28 AM
Rank: Veteran

Joined: 5/7/2009
Posts: 1,032
Location: Sea of Transquility
This topic reads like the tale of Ali Baba and the forty thieves (Read Wazua tax evaders).

Anyway am concerned on the impact of the new tax to commercial tenants who are already burdened with high speculative rents, VAT @ 16% and now this tax that will be pushed to them. Cost of commercial premises will surely be unsustainable.

As suggested above, there is likely to be a new trend where rental developments will change ownership to companies so that only the net income is taxed.
“small step for man”
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  | | Edit by user: Friday, June 15, 2012 9:44 AM | Reason: Not specified
Bachuma Gate
#58 Posted : Friday, June 15, 2012 9:53:51 AM
Rank: Member

Joined: 3/26/2012
Posts: 280
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.
DOH
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  | | Edit by user: Friday, June 15, 2012 9:56 AM | Reason: Not specified
Wendz
#59 Posted : Friday, June 15, 2012 9:59:01 AM
Rank: Elder

Joined: 6/19/2008
Posts: 4,268
My only concern about investing on rental income especially with our current interest rates is that it was not making financial sense to me before the taxes... i don't know how much it would do after the taxes. However, my way of investing reasonably in real estate and which has worked for me is in capital gains. Even with taxes, you cant beat the ROI which has been higher YIYO. This may change in future, but currently, its a safe haven for investors given that there are not taxes on capital gains. Residential rental income, especially for houses costing 4m+ has been a disaster as an investment.

As an investor, i wouldn't purchase a house for renting, but if i have enough money, i can build one for renting. Why? Because our sales prices are exaggerated and the interest rates are a killer vis a vis the income you'll get. But when you build, its almost 50% cheaper hence the ROI is higher if you rent when you have built it yourself.
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Ali Baba
#60 Posted : Friday, June 15, 2012 10:05:21 AM
Rank: Member

Joined: 8/29/2008
Posts: 573
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.....
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