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Impact of 30% rental income tax on housing development in Kenya
Rank: Chief Joined: 1/3/2007 Posts: 18,095 Location: Nairobi
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Bachuma Gate wrote:Vitu - Your contributions are value addition. What I meant with mulolongo type is those "train" type of houses with a toilets at the end. They can even be mabati type. They could also have be constructed on land with certificates. Landlord collecting rent is always cat and mouse thing. Tenant volatility is high. Then factor in that these are in large numbers all over kenya. It may prove to be a headache for KRA. Its akin to the informal sector businesses. The moment some fellas realize they can earn more from this type of houses than the formal ones, they will prefer investing here. EG. In Pipeline Embakasi, almost all the flats are tuu rooms with toilets per floor cause they fetch much more than the greenspan type. You can see how thing is booming.
So yes it may drive guys to invest more in these type of structures. They will pay tax but well below their real incomes. LOL, perhaps that's what I should be investing in  Become a slum lord! When you said Mlolongo I thought the Mlolongo the town  Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Chief Joined: 1/3/2007 Posts: 18,095 Location: Nairobi
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Lolest! wrote:VituVingiSana wrote:]It's a slow process but if the Taxman wants to determine how many units are rented, it will ask the landlord to certify how many units are occupied. Then it can 'raid' all the vacant properties to see if they are rented. Finally, it can access electricity & water records of each unit. If Flat A uses 1,000 KW monthly & is occupied, why is Flat B using 1,000 KW yet is unoccupied?
Could be a relative being given free accommodation. Estate agents are known to steal from landlords this way by claiming that some units were unoccupied so that they pocket the rent. This is a loophole but KRA could audit the landlord's accounts to find the rent details. Well, then the Landlord has to 'prove' there is no rental income from the vacant property. Are there ways around paying taxes (Tax Evasion)? Yes. Nevertheless, if one is caught in a lie, it gets pricier by the month. If an estate agent cons a Landlord then it can be considered a crime. The Landlord will go scot-free since there was NO income collected but if the KRA turns its attention to the Agent (with the Landlord's assistance) then it gets interesting! Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Chief Joined: 1/3/2007 Posts: 18,095 Location: Nairobi
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Lolest! wrote:VituVingiSana wrote:]It's a slow process but if the Taxman wants to determine how many units are rented, it will ask the landlord to certify how many units are occupied. Then it can 'raid' all the vacant properties to see if they are rented. Finally, it can access electricity & water records of each unit. If Flat A uses 1,000 KW monthly & is occupied, why is Flat B using 1,000 KW yet is unoccupied?
Could be a relative being given free accommodation. Estate agents are known to steal from landlords this way by claiming that some units were unoccupied so that they pocket the rent. This is a loophole but KRA could audit the landlord's accounts to find the rent details. Well, then the Landlord has to 'prove' there is no rental income from the vacant property. Are there ways around paying taxes (Tax Evasion)? Yes. Nevertheless, if one is caught in a lie, it gets pricier by the month. If an estate agent cons a Landlord then it can be considered a crime. The Landlord will go scot-free since there was NO income collected but if the KRA turns its attention to the Agent (with the Landlord's assistance) then it gets interesting! Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Veteran Joined: 1/4/2010 Posts: 1,668 Location: nairobi
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Githae /Njiraini are on the right path regarding taxation. Once they set an enabling environment for collection of idle land tax, probably after enacting the land commissions, this will result in flooding of land for sale hence reduction of land prices. People will now opt to buy land and construct as opposed to renting. This will cause a surge in employment within the construction sector hence reduction of crime rate,poverty, unemployment,landlessness e.t.c This, coupled with Turkana Oil is the solution for Kenya's economy. As Iron Sharpens Iron, So one Man Sharpens Another.
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Rank: Member Joined: 3/26/2012 Posts: 232 Location: Nairobi
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On landlords paying tax from the rent income Njiraini said the issue has been blown out of proportion by the media and wazua http://goo.gl/fb/hNZvtMy folks told me that my very first word was 'billionaire'
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Rank: Member Joined: 3/26/2012 Posts: 232 Location: Nairobi
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Kulipa ushuru ni kujitegemea My folks told me that my very first word was 'billionaire'
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Rank: Elder Joined: 10/11/2006 Posts: 2,304
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ralp_mutu wrote:Kulipa ushuru ni kujitegemea YES! More Kenyans in the middle class bracket to feel SUFFICIENTLY ANGRY when their tax money is wasted by MPigs. Good for democracy!  Conventional thinkers waste time building shelters when they are unnecessary and then have no shelters when they need them the most. Socionomists do the opposite.
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Rank: Elder Joined: 4/30/2008 Posts: 6,029
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ralp_mutu wrote:Kulipa ushuru ni kujitegemea i wont pay and will strive to avoid and evade taxes as much as possible.it is common knowledge an mp from nakuru county made his millions by sliding kra cheques,used the money to build a palatial home in karen and to get him to parliament where he has enjoyed tax free salary and given a grant to buy a duty free car.githae should know that i struggled to build my real estate unlike him whose abnormal salary is cushioned from tax.
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Rank: Member Joined: 8/29/2008 Posts: 571
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MAWINDER: Avoiding is fine.No qualms about it.But when you evade,know that KRA might one day catch up with you!!!
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Rank: Elder Joined: 12/17/2009 Posts: 3,583 Location: Kenya
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Ali Baba wrote:MAWINDER: Avoiding is fine.No qualms about it.But when you evade,know that KRA might one day catch up with you!!!
Cowards die many times before their deaths;The valiant never taste of death but once
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Rank: Member Joined: 8/29/2008 Posts: 571
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NAKUJUA:If I would evade taxes,I would not boast on a public forum like Wazua.However,he who is innocent of this vice,should cast the first stone.Anyone????
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Rank: Member Joined: 8/29/2008 Posts: 571
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Tax evasion is like having sex with a prostitute.a lot of people do it--but no one wants to talk about it.
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Rank: Elder Joined: 9/12/2006 Posts: 1,554
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Ali Baba wrote:Tax evasion is like having sex with a prostitute.a lot of people do it--but no one wants to talk about it. Cant be true... the two cannot be compared, evasion you dont pay and for the prostitute you pay...infact its lipa kabla ya ku kula
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Rank: Elder Joined: 4/30/2008 Posts: 6,029
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Ali Baba wrote:Tax evasion is like having sex with a prostitute.a lot of people do it--but no one wants to talk about it. For instance i buy items at bargain prices by asking the seller not to issue me with an etr and i also avoid its use when i sell.for kra guyz i sort them out coz they have to earn a living too.
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Rank: Member Joined: 8/29/2008 Posts: 571
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JAMANI: I agree,but I was talking about going around and bragging that you evaded taxes--no one does it.We all keep quiet.And I think most of us are "guilty" of this vise,although it has "not been proven" yet....
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Rank: Member Joined: 8/29/2008 Posts: 571
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MAWINDER: Yes!! And then you keep mum enjoying this KRA/Njiraini tough talk.!!Actually,I pity those guys whose income is all from their employer.I think they are the ones who are Njiraini compliant!!
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Rank: Member Joined: 10/29/2007 Posts: 76
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With high interest rates and now enforcement of the 30% tax on rental income, has the unrealistic property price appreciation been capped? are we going to see prices of properties stagnating or even going down? Why would I invest 40million in property with a rental income of less than Kshs. 3m per year (before tax) instead of TBills at an interest rate of approximately 15% which will give me Kshs. 6m per annum guaranteed and has no capital gains tax attached to it?
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Rank: Member Joined: 3/20/2009 Posts: 348
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itz wrote:Ali Baba wrote:ITZ:Even in kenya you itemize.Please familiarize yourself with Income tax Act cap 470.In any case,rental income tax is not new.I don't know why we are arguing over this.Compliance is necessary to prevent kenya going the Greece way!!The bigger the govt,the more the revenue is required.Come on,pay your taxes and I pay mine and we will not go the Greece way.Talking of US and lack of VAT,what a hypocrisy! USA needs VAT more than any other country in the world.Their deficit is frightening.Is that what you want?? Pay up,rental income was taxable even in 1963.>>>Check Cap 470. @Alibaba.That is the problem right there.Kenya is overtaxed and the money is not being used for the right purposes.Yes Kenya is headed the Greece/European way where all they do is increase taxes,Grow government and public debt while choking the private sector.A 30% tax on rental income is prohibitive. I want smaller effective govt which i know we will never get because we already embarked on this new county system which also means yearly property taxes are on the way. And for the good old US these guyz are smarter than you think.By 2020 US will be a net exporter of gas(they are the saudi of natural gas) and Oil and am sure u know what that means.Their efficiency in manufucturing and production will be amazing.Dont listen to the noise about deficit remember they have the world reserve currency and they can play with that too. http://www.standardmedia...ceeds-KRA-tax-collection
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Rank: Member Joined: 8/29/2008 Posts: 571
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Mwania: Yes,you invest in Tbills instead of rental property.But then,TBills interest rates fluctuates.When the rates hit say 5% like they were a few years ago,what do you do?? The problem with Wazua,we have many armchair investors who either have no capital to invest in real estate,but they want to continue contributing ideas which are not realistic to investing public.I have never found an investor with such choices ---like you Mwania.But,then,you invest for yourself.Even if you choose to "invest" in a safe which you keep under your mattress,its your business.Njiraini will not tax you,yes,but then,even your wallet will be empty.
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Rank: Elder Joined: 6/17/2008 Posts: 23,365 Location: Nairobi
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http://www.ipsos.co.ke/s...y_over_rental_income_tax..."Wewe ni mtu mdogo sana....na mwenye amekuandika pia ni mtu mdogo sana!".
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Impact of 30% rental income tax on housing development in Kenya
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