Time will tell whether this will have a negative impact on housing development in Kenya. I personally think it will.

1. A good number of investors in this sector have bought property to rent. Imagine buying 2-2 bed flats at 9m. You get rent of 15K*2=30K less tax @30%. Is it worth investing 9million to end up with 20K per month ?. I see people rather putting their monies in other investment eg T/Bills etc where even with a rate of 9%, you are likely to end up with more than 50k pm.

2. People who still want to invest in properties will prefer areas where it is difficult for the tax man to touch them. So I am seeing more of mlolongo type of houses more than the elegant apartments coming up in Eastlands.

3. That rate of 30% is high. It should be graduated like PAYE but at lower rates to encouraged investment in this sector or even zoned. The pricing of flats/houses in Lavi, Kile, Runda is such that the investors may be able to pay tax but with rents of 5-28K in Eastlands, Ronga, Kitengela, Busia, Nyeri, Nakuru and other kenyan towns, I foresee alot of issues.


4. If you borrow to buy a flat and then rent which majority do. Where does this leave you with the tax thing. The INTEREST that you pay the banks on 4.6m is well over 60K pm @20% interest. Yet your rental income is 15-18k. It is not much different when you borrow to build flat(s).

5. Most likely landlords will pass this tax to tenants. If you stay in middle class areas eg Langata, South B, Jamhuri, prepare to consider moving to Ronga, Kasarani, Eastlands, Kite etc

lets wait wether the finance guy will touch it, fingers crossed

DIGITALI:what you are saying is not true.Even those other investments which landlords might invest in are still taxable.So,where is the difference??That argument does not hold water.No one stops investing because of taxes.Taxes and death are two things we don't like...but we must deal with them.Lie to non investors.....

Increasing rent is not a solution as such.KRA will still tax the increase,hence the landlord's taxable income will go up.Now,you whiners pay tax!! That's the only way out.personally,I pay more than sh 500,000 a year in taxes.Let's share this burden together!!!!

If you pay 30k rent but you agree with the landlord that for tax purposes, the rent will be quoted at 10k or 8k [but you still pay him/her 30k] then what next? Will the government/KRA set minimum rents depending on the house?

This thing is just too easy to beat [for residential]. If a landlord gives you an option: Say you pay 30k and cough up an extra 9k in taxes or say you pay 8k and he coughs up the 2.4k taxes or you share it, which option will you take?

By the way, taxes will always be passed to the consumer!!! For those of you thinking that this burden is for the landlord, you had better think again! If you are a tenant, prepare to carry the burden or move to "vitongoji duni"! Habari ndiyo hiyo. These money is coming straight out of YOUR pocket!!!

MAICHBLACK: I think you are very ignorant of the Income Tax act. I said increasing rent to cover taxes increases taxable incomes.therefore the cycle continues.I would not agree to pay 30k rent and say rent is 10k to cheat the taxman.Schemes for cheating taxman,I would not be involved.If I pay 30k rent....let it remain 30k,what the landlord does with KRA is not for me to be involved.besides its illegal to help another taxpayer evade taxes.I think you are a tax evader.Mr Njiraini,push on....let us all share the tax burden.Flush them out from every where.ITS MENE MENE TEKEL for tax evaders!!

Vitriol masks valid points and makes even otherwise intelligent individuals look as stupid as hell.

Maichblack:then I apologize for the vitriol.Si ni sawa sasa??

NAKUJUA: it will help a lot.It may not prove but it will reduce evasion.Plus they have officers in the field who will be walking around verifying such.Also,if you have built a house and its not occupied,it shows you have a source of income which maybe is not taxed and this will help reduce evasion even from other sources.Let's say a mitumba trader or say jua kali people,they evade taxes(most of them) and invest in plots and houses.If WE(taxpayers and KRA)find out that you have a house,then it will not help compliance but zero in on mitumba income.Sounding good??I like what I'm hearing from Githae.All Landlords must be brought to "Times Tower umbrella".Good.Very good.I love you Githae and Njiraini.God bless KRA.