Wazua
»
Investor
»
Property
»
SHARES versus REAL ESTATE
Rank: Member Joined: 9/14/2011 Posts: 869 Location: nairobi
|
sanity wrote:Now that the discussion is on real estate,could guys please advice on the following.I have some land in which I hope to develop rentals.Now me question is,is it better to transfer the land to my company and develop as a company or I just go ahead and develop as an individual.The issue of KRA taxes is causing me this confusion. I would also like to understand the tax implications/benefits
|
|
|
Rank: New-farer Joined: 2/9/2015 Posts: 11 Location: juja
|
thanks at @mthaka and @streetwise your advice is greatly appreciated.
|
|
|
Rank: Elder Joined: 9/23/2009 Posts: 8,083 Location: Enk are Nyirobi
|
sanity wrote:Now that the discussion is on real estate,could guys please advice on the following.I have some land in which I hope to develop rentals.Now me question is,is it better to transfer the land to my company and develop as a company or I just go ahead and develop as an individual.The issue of KRA taxes is causing me this confusion. More advantageous to develop as a individual. If you develop as a company you pay tax twice, income tax at the level of the company and on dividends/salary/bonus your company pays to yourself. This is known as Economic Double Taxation. Life is short. Live passionately.
|
|
|
Rank: Member Joined: 2/20/2007 Posts: 767
|
sparkly wrote:sanity wrote:Now that the discussion is on real estate,could guys please advice on the following.I have some land in which I hope to develop rentals.Now me question is,is it better to transfer the land to my company and develop as a company or I just go ahead and develop as an individual.The issue of KRA taxes is causing me this confusion. More advantageous to develop as a individual. If you develop as a company you pay tax twice, income tax at the level of the company and on dividends/salary/bonus your company pays to yourself. This is known as Economic Double Taxation. Whereas that is true, one can always make sure the company never pays dividends, and makes minimal profit. As an individual, how do you deal with depreciation and other expenses related to the rental property? Are these deducted from the gross earnings before declaring the rental earnings on the tax returns. They must find it difficult....... those who have taken authority as the truth, rather than truth as the authority. -G. Massey.
|
|
|
Rank: Elder Joined: 9/23/2009 Posts: 8,083 Location: Enk are Nyirobi
|
tom_boy wrote:sparkly wrote:sanity wrote:Now that the discussion is on real estate,could guys please advice on the following.I have some land in which I hope to develop rentals.Now me question is,is it better to transfer the land to my company and develop as a company or I just go ahead and develop as an individual.The issue of KRA taxes is causing me this confusion. More advantageous to develop as a individual. If you develop as a company you pay tax twice, income tax at the level of the company and on dividends/salary/bonus your company pays to yourself. This is known as Economic Double Taxation. Whereas that is true, one can always make sure the company never pays dividends, and makes minimal profit. As an individual, how do you deal with depreciation and other expenses related to the rental property? Are these deducted from the gross earnings before declaring the rental earnings on the tax returns. 1. Hard to make a tax loss from normal rentals. Tax on rentals is computed separately from other business of the company/ individual. 2. Depreciation (of equipment and other furnishings) and other direct expenses like interest, caretaking, repairs are deducted for all tax payers. 3. You can depreciate the building itself in special cases like hotels, factories, approved hostels etc. . Life is short. Live passionately.
|
|
|
Rank: Member Joined: 3/26/2012 Posts: 830
|
I am 101% sure my landlord does not pay taxes. So I think transferring rental property to a company is a dumb move (unless you fear other legal implications like building collapsing)- but I hope everyone in wazua is sober enough not to risk other's lives. My view is that as long as demand outstrips supply in the lower market segment, tax costs can be shifted to tenants. Therefore, if you target the low income segment, you dont need to transfer to a company to minimize tax...you will either shift it or avoid it- bottomline is that the burden is not yours. A successful man is not he who gets the best, it is he who makes the best from what he gets.
|
|
|
Rank: Member Joined: 3/26/2012 Posts: 830
|
On another note about the topic...I think a smart investor should own both stocks and real estate. Stocks have outperformed all other asset classes including real estate. However, the differences in their performance is not large. When you consider the differences in risk between the two investments, real estate wins hands down. Real estate has slighly lower returns in the long term...but considering the risk, it is much safer (by a huge margin) compared to stocks. I am considering investing 70% of my personal portfolio in real estate going forward. A successful man is not he who gets the best, it is he who makes the best from what he gets.
|
|
|
Rank: Elder Joined: 10/3/2008 Posts: 4,058 Location: Gwitu
|
Stocks any day! Buy KQ at 45 sell at 7/- Buy Mumias at 40/- sell at 2/- Truth forever on the scaffold
Wrong forever on the throne
(James Russell Rowell)
|
|
|
Rank: Elder Joined: 9/23/2010 Posts: 2,225 Location: Sundowner,Amboseli
|
@S Mutaga i agree with you on need for both assets with a bias on land(i hear they stopped producing more land) As @Murchr said in an earlier post,with land,you have total control as opposed to buying into a Merali company where despite a good year ,you Will still see a loss in the books  @SufficientlyP
|
|
|
Rank: Member Joined: 3/26/2012 Posts: 830
|
Sufficiently Philanga....thropic wrote:@S Mutaga i agree with you on need for both assets with a bias on land(i hear they stopped producing more land) As @Murchr said in an earlier post,with land,you have total control as opposed to buying into a Merali company where despite a good year ,you Will still see a loss in the books Real Estate- Land - Residential Property - Commercial Property - Hotels (lodging) - Hostels I am thinking hostels for cash flow purposes. Anyone here who owns hostels? kindly share your experience. A successful man is not he who gets the best, it is he who makes the best from what he gets.
|
|
|
Wazua
»
Investor
»
Property
»
SHARES versus REAL ESTATE
Forum Jump
You cannot post new topics in this forum.
You cannot reply to topics in this forum.
You cannot delete your posts in this forum.
You cannot edit your posts in this forum.
You cannot create polls in this forum.
You cannot vote in polls in this forum.
|