If you have four houses each at 400,000 it means your total monthly rental income is 1,600,000 per month 19,200,000 per year. Please take into context months you don’t have tenants (it’s advisable to have receipts).
Deduct 20% to cover for allowances on house maintenance. That’s 3,840,000 per year. If you have a loan on the house this is where you also factor it in and deduct it. That’s 15,360,000/=.
Then deduct the the untaxable threshold of 2,820,000. That leaves us with 12,540,000 for tax and 6,660,000 that’s not supposed to be taxed legally.
Then take off a tax of 20% of the balance after all the legal deductions. That’s 20% of 12,540,000 which 2,508,000 as payable rental tax for the year. If the property has more than one owner then divide the taxes based on the shares in the property by every owner.
Most people deduct 20% from the principal income which in this case is 19,200,000 hence paying 3,840,000 in tax instead, that’s an extra of 1,332,000 in rental tax due to ignorance….
Jaluum Herberts Luwizza is a Speaker,Writer, Columnist with the C.E.O Magazine and Contributor with the Nile Post.He is also a Business Consultant with YOUNG TREP East Africa’s No.1 Business Management and Consultancy firm that helps people start and grow profitable businesses.
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