Rent that is weighing down hustlers will soon come down if Parliament passes the Finance Bill, 2023 in its current form.
National Assembly Majority leader Kimani Ichung'wah said the reduction in income tax for landlords will see a reduction in rent.
Breaking down the proposed Finance law, Ichung'wah said the Bill proposes the reduction of the applicable income tax rate on monthly rental income from 10 per cent to 7.5 per cent.
"The reduction shall have a trickle-down effect on the cost of rent payable by tenants as the Bill has reduced the tax payable by landlords for monthly rental income," Ichung'wah said.
Rental income is described by the Kenya Revenue Authority as tax payable by resident persons (individual or company) on rental income earned for the use or occupation of a residential property.
In this case, the rent income is between Sh288,000 (Sh24,000 per month) and Sh15 million per year.
Landlords with rental income below Sh288,000 or above Sh15 million per year are required to file annual income tax returns and declare this rental income together with income from other sources.
Currently, residential rental income is charged at a flat rate of 10 per cent on gross rent received per month.
It is payable when landlords receive rent from their tenants either monthly, quarterly, semi-annually or annually.
However, returns must be filed monthly.
Rental income is filed on or before the 20th of the following month.
For example, rent received in April is declared and tax paid on or before 20th May.
This high rate of tax has been blamed for the high costs of rent with hustlers being the worst hit.
