Kenyans Enticed With Ksh 9000 Monthly Tax Relief in Affordable Housing

Big 4 aGENDA
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Affordable Housing Programme (AHP) has been in the list of president Uhuru’s Big 4 Agenda. Christened Boma Yangu, the Initiative¬†aims to facilitate ownership of affordable and decent housing for Kenyans in the low and middle-income brackets who are unable to own decent homes due to the prohibitive land and construction costs and stringent financing requirements.

The project launched in January last year targets to roll out 500,000 units by 2022 to try and plug the housing gap in the country. Two hundred and twenty-eight two-bedroom units have so far been completed and will be handed over in June. Government is offering a Ksh 9,000 a month in tax relief that will be channeled to savings for homeownership, an incentive to the employed wanting in on the project.

For instance, a person earning Ksh 90,000 a month is currently liable to pay KRA Ksh20,740 but under the housing incentive plan, their income tax would reduce to Ksh11,740.

Employers will subtract the amount identified as Affordable Housing Relief (AHR) from income tax deducted before passing on the rest to the Kenya Revenue Authority. Initially, the government had proposed a 1.5% levy to be forcefully deducted from employees and channel into the housing fund, but the proposition was lauded with controversy that saw the court rule it out as illegal.

Charles Hinga, the Principal Secretary for Housing and Urban Development, mentioned that investors and developers in the Affordable Housing Programme will enjoy fast-tracking of approvals for projects, 15 percent corporate tax rate, no VAT on construction inputs for affordable housing projects and reduced customs tariffs

Ideally, saving into the housing fund is now voluntary as only workers who register for the program will enjoy the relief. The PS noted that the Kenya Revenue Authority will be issuing details on tax relief to employers.

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