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Taxation of rental income on residential building
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heri
#1 Posted : Wednesday, June 26, 2013 10:59:35 AM
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Joined: 9/14/2011
Posts: 869
Location: nairobi
I have noted that the ITA defines an industrial building in the second schedule 5 (1)(f) as:
a building in use as a rental residential building where such a building is constructed in a planned development area approved by the Minister for the time being responsible for matters relating to housing[/color]also Second schedule 1(e) says:in the case referred to in paragraph 5(1)f for the year commencingon or after 1
st January 2008, five per cent-

which means that a deduction of 5% on cost of building is allowed before computing tax due
What does the Act mean by referring to planned development area approved by the minister for housing above?

anyone who has been paying tax on rental property? are you making the 5% deduction on cost of construction?
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a4architect.com
#2 Posted : Wednesday, June 26, 2013 11:08:11 AM
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Location: nairobi
@heri..give us a link to the full legal chapter. Maybe then we can be able to see why an industrial building is being defined as a rental residential building.
As Iron Sharpens Iron, So one Man Sharpens Another.
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heri
#3 Posted : Wednesday, June 26, 2013 11:45:46 AM
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Location: nairobi
a4architect.com wrote:
@heri..give us a link to the full legal chapter. Maybe then we can be able to see why an industrial building is being defined as a rental residential building.
do you mind to look at the ITA second schedule starts on page 165
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Lolest!
#4 Posted : Wednesday, June 26, 2013 8:07:11 PM
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Joined: 3/18/2011
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Location: Kianjokoma
Landlords are filing these returns in ignorance. I wonder what details they are filling yet they didn't pay tax in 2012. KRA publicity dept deserves a bash
Laughing out loudly smile Applause d'oh! Sad Drool Liar Shame on you Pray
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maka
#5 Posted : Wednesday, June 26, 2013 8:36:01 PM
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Joined: 4/22/2010
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Location: Nairobi
Lolest! wrote:
Landlords are filing these returns in ignorance. I wonder what details they are filling yet they didn't pay tax in 2012. KRA publicity dept deserves a bash

wacha wakupate...
possunt quia posse videntur
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butterflyke
#6 Posted : Wednesday, June 26, 2013 10:32:35 PM
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Joined: 5/1/2010
Posts: 3,024
Location: Hapa
maka wrote:
Lolest! wrote:
Landlords are filing these returns in ignorance. I wonder what details they are filling yet they didn't pay tax in 2012. KRA publicity dept deserves a bash

wacha wakupate...


@maka, can you advice on what landlords should do?
Float like a butterfly, sting like a bee. - Muhammad Ali🐝
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heri
#7 Posted : Thursday, June 27, 2013 9:18:22 AM
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Joined: 9/14/2011
Posts: 869
Location: nairobi
[quote=heri] I have noted that the ITA defines an industrial building in the second schedule 5 (1)(f) as:
a building in use as a rental residential building where such a building is constructed in a planned development area approved by the Minister for the time being responsible for matters relating to housing[/color]also Second schedule 1(e) says:in the case referred to in paragraph 5(1)f for the year commencingon or after 1
st January 2008, five per cent-

which means that a deduction of 5% on cost of building is allowed before computing tax due
What does the Act mean by referring to planned development area approved by the minister for housing above?

anyone who has been paying tax on rental property? are you making the 5% deduction on cost of construction?[/any landlord in the house who knows whether it is okay to deduct the 5% of cost each year as allowable deduction before arriving at taxable rent? appreciate your help on this ]
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heri
#8 Posted : Thursday, June 27, 2013 9:20:30 AM
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Posts: 869
Location: nairobi
Does any landlord or tax expert in the forum know if its okay to deduct 5% of the cost of construction from rent to arrive at taxable rent? from income tax second schedule, it seems to be the correct way of looking at it?

help appreciated?
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heri
#9 Posted : Thursday, July 04, 2013 6:46:53 PM
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Posts: 869
Location: nairobi
Is it that people in the forum don't know the answer or you don't want to share knowledge

Please help
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sparkly
#10 Posted : Saturday, July 06, 2013 2:50:17 PM
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Joined: 9/23/2009
Posts: 8,083
Location: Enk are Nyirobi
heri wrote:
Is it that people in the forum don't know the answer or you don't want to share knowledge

Please help


The rate of industrial building allowance for approved planned residential buildings is actually 25% meaning you can claim the full cost in 4years.

Applies to estates approved by the housing ministry.

The 25% is on the qualifying costs. This excludes price of land and the fittings.

You start claiming the 25% the first year of getting rent from the building.

You might end up in tax losses if you claim the allowance. Since you can only carry foward losses for 5 years, you will need to ask KRA to extend time of carrying forward the losses more than 5 years.

Any more questions?
Life is short. Live passionately.
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