you are deducted the interests first then the net is taxed so if you took a loan say you are paying 36000 and the rent is 40000 then 4000 is the only net taxed.

@kyt I believe that's the case and if not then one should incorporate a company and be creative in accounting.You can beat the govt on this one if you choose to eliminate the noise and focus on technicalities. Losers will be those that will keep their real estate registered in their names. Be smart incorporate.

I think the KRA fellows will not be interested in the interest on borrowed construction capital. They are interested in the gross rent collection minus nothing and applying 30% pap!!! This means that there will be absolutely no money to be made here in the long term as the landlord will be forced to finance the loan gap left by the inability of the business to pay for itself and as such the venture will not be worth the effort and the risk...

Again with the dwindling revenue collections by KRA I have a feeling that they might do the unthinkable. Those KRA idiots had seen all that (about forming a company or incorporating one to handle the real estate) and they know what people will do to deny them that tax...What if the intention of KRA is to separate the corporate's core businesses incomes from the real estate and tax them separately...

That is scary, it doesn't work that way anywhere in the world....even in Somali or DRC.

Haha okay, I get what you mean and will keep my ears on the ground. Though the best way out of this KRA - landlord issue is to incorporate.