Residential Income Tax in Kenya from 2016
Effective date of the new simplified tax regime (i.e. Residential Rental Income Tax) The new rate of 10% tax on gross rent takes effect on 1 st January 2016 and will apply to rental income received from calendar month January 2016. E.g someone with a house going for rent of Kshs 50,000 in Nairobi will pay 5000 a month.
Eligible persons shall be required to file and make correct declaration through a simplified tax return via iTax System and pay tax due on or before the 20th day of month following the rent receipt. The first return for January 2016 shall be expected to be filed by 20th February 2016. Any tax not paid by the monthly due date will attract penalties and interest as specified in the Income Tax Act.
This tax will definitely have an impact on rental returns to home owners in Nairobi where rental returns are premium and certainly other major towns like Mombasa, Nakuru etc but that its only 10% and predictable will make investors in real estate in Kenya able to plan better when looking for house to buy in Nairobi or properties for sale in Nairobi or Kenya in general.
By Lawrence Mosa and Carol Nkatha