My two cents on this:

1. Njiraini has done one thing he has widened his tax bracket, since house rent is bound to go up thus those from informal sector jua kali will pay up income tax somehow (if landlords increase rent by similar tax a percentage).
2. Investment in rental properties will stagnate at the current levels and maybe go down if the overall effect does not spur growth leading to reduced interest rates taxes notwithstanding.

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Someone sort this out and advise:

If you have rental flats earning you say 100k per month with the following expenses:
1. Mortgage interest 114,000
2. Monthly maintenance costs of 10,000

What amount would KRA ask for as tax??

BAICHUMA GATE:Then keep worrying how much you make.Real estate is not for everyone....just the way stocks/bonds,bills are not for everyone.

ALI

So what is you honest TAKE on the IMPACT without personalizing anything based on the title of my thread below.

Impact of 30% rental income tax on housing development in Kenya.

I think this tax although at first looks punitive is a good thing..It will encourage property ownership.

Rental income benefits a very smal percentage of kenyans..we need policies that will incourage pple to own houses and I believe this tax will be a push in the right direction.

If for instance you are paying rent of 30k I am quite sure you can get a mortgage that you can comfortably service..further more I think there are tax incentives/benefits that come with having a mortgage.

Those who will get the pinch are those who dont afford mortgages...prepare for a rent increase I think starting from next month..even if the tax wuld not have been effected yet.

Taxing landlords or to be more precise rental income has been in the laws in Kenya for a long time. It just was never implemented. KRA is not changing the law, they are simply saying that they've found a way to catch you.

Kenyans don't want to pay this tax...Yet they say MP's are mean evil going to hell people. Ha!

So even if there's a hullabaloo one year from now, it will go nowhere as you have to repeal that law. That I can assure you won't happen after KRA shows the gov't how much money they will get.

Property prices in Kenya are too high. Including rental prices. There is this mindset that landlords can screw their tenants willy nilly. With formalisation of the industry as this will lead to, this will not be the case.

Let's take an example.

I'm paying rent of 30k somewhere in South B. Landlord decides to increase by 10% to pay his taxes.

Due to lower returns, banks have a problem getting people to subscribe to their shylock intrest rates. They have to reduce their mortgage rates to attract guys.

Soon it becomes attractive to stop paying your landlord an income and instead go get a mortgage in a house somewhere on Thika road or Mombasa Road.

After all, if you take a pen and paper you realise that you are better off getting a mortgage. Heck it might even be profitable due to capital gains.

My opinion is that this new tax will lead to the collapse of property prices in about 5 years. You can take that to the bank.

Next is taxation on capital gains. That to me is the reason why Kenya will never ever become developed however many konzas we build. Hoarding has never been good for the economy. Now here is a country that each and everyone in the property industry is hoarding.

That's my opinion.

I am sure all of them own some form of real estate, but thats not their core generator of riches, or rather its not real estate that made or is keeping them rich.

according to forbes, of all the top 1000 richest, about 120 are on that list due their riches being generated primarily through investments, stocks included - with warren buffet leading that category.

starting a business, will most likely not get you to that list - taking your business public, and thus investing in the stock market will be more likely to get you on that list.

true,
hawa speculators ni wengi sana