How do I account for rental income where there is mixed use of property?

  • Where the property has both residential and commercial tenants, the income will be treated as follows:
  • Where the gross annual¬† rental income is Kshs. 288,000 or less than Kshs. 15 million, all rental income is combined in the annual Income Tax return.
  • Where the gross annual rental income is from the commercial tenants and or combined (residential & commercial) and is more than Kshs. 15 million, this part of the income is accounted for as the commercial rental income and taxed at either individual graduated scale or corporate rate of 30%. Remember withholding Tax on the Rental Income will also apply.

How do I claim expenses on Commercial Rental Income Tax?

Expenses being claimed under the commercial rental income portion should be apportioned in the same ratio as the income of the commercial rent pertains to the total income.

What is the monthly rental income tax?

This is a tax on gross residential rental income between 288,000 (ksh. 24,000 per month) and 15,000,000 per annum and the tax is 10% on gross rent payable monthly on rent received.

If my building has commercial properties on ground floor and residential on 1st-4th floor, which rental income tax should I pay?

You may elect to file and pay tax either in the Monthly regime  (if the income is between 288,000 PA or 24,000PM and upto Kshs15,000,000) or the Annual regime if the income is above Kshs15,000,000.

Do irregular income earners pay taxes?

Every person pays taxes as per the tax obligations registered under their PINs

Is interest income a specified source of income?

Yes

How is KRA handling the issue of Wrong obligations added by cyber people and taxpayers believing cyber cafes are our agents.

iTax system restricts the addition of certain obligations, which have to be approved at the stations. There are also sector based trainings targeting the cyber attendants and taxpayers. Taxpayer with wrong obligations do write to their respective tax station for rectification.

Why is KRA sending defaulter notices to employees who have already been deducted PAYE by their employers upon filling their income tax returns?

This happens where The employer has not filed The PAYE returns in iTax, but with The employee having The evidence of PAYE deduction, The issue is sorted at their tax stations.

Most of the taxpayers are not computer literate and cannot access computers easily. How does KRA expect us to comply?

We advise such taxpayers to seek services at our iTax support centres, Huduma centres and nearest KRA office

The system is very complicated for them, what is KRA doing on this?

KRA is conducting trainings country wide and there are YouTube videos to guide on the same. KRA is also working on simplifying the return filling systems.