Capital Gains Tax – KRA

What is Capital Gains Tax (CGT)? CGT is tax that is levied on transfer of property situated in Kenya, acquired on or before January 2015. It is declared and paid by the transferor of the property Rate of Tax The rate of tax is 5% of the net gain.It is a final tax i.e. the Capital Gain is not subject to further taxation after payment of the 5% rate of tax.Net Gain is Sales Proceeds minus the Acquisition and Incidental costCGT is on gains arising from sale of property. How to Compute Capital Gains Tax Net Gain = (Transfer value – Incidental Costs on Transfer) – Adjusted Cost ( Acquisition Cost + Incidental Costs on Acquisition + Any enhancement Cost) What constitutes a transfer? If property is sold, exchanged, conveyed or otherwise disposed of in any manner (including by way of gift), whether or not for consideration; On the occasion of the loss, destruction or extinction of property whether or not a sum by way of compensation is received in respect of the loss, destruction or extinction unless that sum is utilized to reinstate the property in essentially the same form and in the same place within one year or…

Rental Income Tax – KRA

Rent means payments received from a right granted to another person for use or occupation of immovable property which includes premium or similar consideration received for the use or occupation of property. Rental Income Taxation Under Annual Regime Rent is charged on actual amount received Expense incurred to generate rent is allowed under section 15 of the Income Tax Act. Tax is calculated under individual graduated scale or corporate rate of 30% In addition, rent on non-residential buildings (Commercial) is taxable under the VAT Act(No. 35 of 2013) – Laws of Kenya. How to determine Taxable Income Gross Rent income for the year: Property A – 5 units*Kshs. 20,000*12months 1,200,000 Property B – 10 units*Kshs. 15,000*12months 1,800,000 Total Rent income in Kshs. 3,000,000 Less: Allowable expenses (Kshs.): Land Rent/Rates …

5 Ways to Improve Your Chances of Getting a Mortgage

Buying a home is probably the largest single financial investment you’ll ever make and, if you’re like most people, you’ll need a mortgage to make it happen. While there are no guarantees that you’ll qualify for the mortgage you want, there are certain steps you can take that will make you more attractive in the eyes of lenders. Read on to find out the best tips for improving your chances of getting a mortgage. Check Your Credit Report Lenders review your credit report – a detailed report of your credit history – to determine whether you qualify for a loan and at what rate. By law, you are entitled to one free credit report from each of the “big three” credit rating agencies – Equifax, Experian, and TransUnion –every year.1 If you stagger your requests you can get a credit report once every four months (instead of all at the same time), so you can keep an eye on your credit report throughout the year. 2. Fix Any Mistakes Once you have your credit report, don’t presume everything is accurate. Take a close look to see if there are any mistakes that could negatively affect your credit. Things to watch…

Land grab cartels chipping away at investor confidence in Kenya

Land grabbing is a chronic, malignant and deeply rooted problem and sadly a familiar tale to every Kenyan. Fraudsters are increasingly falsifying documents while conniving with civil servants to secure title deeds, robbing Kenyans of their precious land, damaging businesses and fuelling investor hesitancy. The problem stems from the unshakeable composition of these criminal networks. Historical cases have seen the involvement of individuals that hold sway on various rungs of our political, legal and regulatory framework. Indeed, incidents have included employees inside ministries, high-ranking political officials, and police officers. Land cartels are sophisticated, protected criminal structures built on such foundations that have become increasingly difficult to break down. Their actions are organised and robust. For example, land grabbers often claim they bought land from a deceased individual before their death, using forged ownership and sale agreements ratified by power-wielding cartel members. Police are then deployed to physically commandeer the land. At the same time, the cartels higher ranking individuals threaten, blackmail and cajole the rightful owners into deterring them from chasing justice. As a result, many individuals and businesses find themselves too scared or unable to fund the legal battle ahead of them. This pattern of events resonates with several…

4 Red Flags to Avoid When Buying a Plot of Land.

Buying land is usually a sound investment because the land won’t go anywhere and you can improve upon it in the future. Besides the primary rule of location, it is important to learn everything you can about a piece of land before you buy it. Aside from learning all you can on paper, go see the land, and inspect it for yourself. Keep an eye out for these red flags when buying land. You’ll want to avoid these problems! The Surrounding Area is zoned for Other Use A land zone is how the local governmental authority determines how a specific portion of land can be developed. Commercial zones are designated for shopping centers and offices and industrial zones are set aside for manufacturing plants and storage facilities. Although the plot of land you purchase could be zoned for residential use, the area around you might be zoned for less than ideal neighbors. It might be empty now, but the municipality might have plans to build a nightclub or federal prison next door. Take a look at the long-term plan for the area and decide if you’re comfortable with the thought of who might move in next door. Covenants and Deed…

Beware buying homes in Mavoko illegally, Housing PS warns

Kenyans are being duped into buying houses under the slum upgrading project in Mavoko, Machakos County, by unscrupulous individuals purporting to be the developers. In a notice on Friday, Housing Principal Secretary Charles Hinga warned that the fraudsters are selling the units illegally. The PS said those targetted in the project have already formed housing cooperatives to mobilise resources to buy the houses. “The target beneficiaries are requested to be patient as the government works out a suitable tenure arrangement and affordable values for the houses,” said Mr Hinga. The PS warned that the government would not be liable for any losses from illegal home purchases. The Sustainable Neighbourhood Programme in Mavoko is part of the government’s efforts to boost access to affordable housing in the Nairobi Metropolitan area. The Sh1.6 billion project features 463 two- and three-bedroom units constructed in three clusters. The units will sit on a 22-hectare piece of land. Similar government housing projects have in the past been a target by fraudsters, prying on Kenyans desperate to own a home.

Karunguru estate: Preserving Kenya’s shared rich history

I recently joined Friends of Heritage Trust Kenya (FoHTK) at the invitation of a friend. Heritage Trust Kenya is a registered trust dedicated to the conservation and restoration of old buildings and their surroundings which tell our shared history. Last month, during a tour of old houses in Kiambu and Limuru, organised by FoHTK, I came across a social media post by John James Glassford of Australia, showing pictures of a house in their old coffee shamba, where “he lived for 20 years working on the farm in between soccer, rally driving, and young ladies!” On closer scrutiny, I realised that I recognised the house as one belonging to my friends, the Kareithi family in Gatundu. Originally known as Ridge Estate, the farm was established by 2nd Lieutenant George Glassford, a New Zealander who came to Kenya in 1919. The following year, he was allocated more than 1,000 acres on Gatundu Road — current Kenyatta Road — under the Soldier Settlement Scheme on which he planted 300 acres of coffee with the attendant infrastructure. He revived interest in golf at Ruiru Golf Club in 1929 where he was a captain in 1930 and president of the club in 1940. In…