Property developers at the Coast have raised concern over the new taxation mode imposed on the sector by the government in this year's budget.
Wycliffe Omuya, a director with Lush Homes Properties, said the taxation will have a negative impact on the cost of housing and the consumers will have to bear the burden.
He said the actual cost of housing will double which might scare property buyers away.
“The process of buying houses will be marred with a lot of bureaucracies as the government intends to impose taxation whenever properties changes ownership,” said Omuya.
“It will take a lot of time and resources to make a single transaction because of the new KRA procedures and legal fees which will come up with the new taxation mode," he said. Mwenda Thuranira, the CEO of MySpace Properties, said the move might discourage the developers in the country.
“Real estate is still a growing industry and should be given support. Developers need to be encourage and the taxation mode should not be seen as a move to oppress them,” he said.
Thuranira said paying tax is everyone’s responsibility but it should be fair throughout all the sectors that contribute towards the economy of this country.
He added that everyone needs a decent house and the government should support the real estate investors to do business in the country.
Last Thursday during the unveiling of this year’s budget, National Treasury cabinet secretary Henry Rotich said the government will re-introduce the capital gains tax and impose withholding tax on winnings from gaming and betting.
Capital gains tax was abolished in 1985 to encourage investments in properties and securities. But these sectors have grown significantly compared to 30 years ago.
This means the taxman will take his share whenever land, houses, stocks, bonds and other marketable assets change hands. Rotich explained, “This will allow wealthier members of our society to also make a token contribution toward our national development agenda.”