Dear Wazuans,
I have seen an advert in today's daily nation on taxation of rental income following the budget statement by CS Treasury.
In your honest opinion which one would be smarter, filing under the old system where I could claim expenses e.g security,maintenance etc as a limited liability company or to start filing at the flat rate of 12% as proposed in the new tax structure.
Thanks for sharing

@kiwaru, I think that option is sealed since the bracket is well defined as gross totaling to less than 10 million. Please explain how you arrive at 30% of net profit as far as finance cost is concerned.

Assume you have just started collecting rent of Kshs 4.8M (and this is a 10% ROR) on the value of the building) so your building is worth 50M.
1. Option 1: pay 10% of gross coming to 480K. No expenses are deducted, including utilities, security, mortgage interest
2. Option 2: pay 30% of net after deducting residential building capital allowance at 25% of the value coming to 12.5M(straight line for 4 years, can be claimed up to 4 years after the fact hence 8 year grace period), as well as the mortgage interest is expensed. Other expenses are the running costs (security, utilities, etc). One may end up avoiding tax for a while.
The 10% looks enticing because it looks like you are paying less that 30% of the gross (directly calculated as 1.44M) but with a little knowledge, no taxes for about 8 years min.
Get a good accountant to set you up. Or look for me

@Bachuma, how,and to whom? This could be the window☺ because the fellows with less income would end up paying more.

@Kiwaru, inbox me at rahatupu at ymail dot com

They'll ask tenants for their landlord's I'd and pin numbers,so you're better off with jua kali tenants.

Allowed capital allowance... usually applied as an expense (depreciation) because it wont make sense to give the allowance after tax, NO??
https://www.kpmg.com/Africa/en/K...scal%20Guide%20Kenya.pdf
Check this document

Kiwaru. That makes sense. Depreciation is allowable income on fixed assets though I could not see a specific reference to it in the KPMG document. I am also not sure the allowable rate per annum.