Real Estate Tax Advisory

At Property Boutique®, real estate tax services are designed to minimize your tax liabilities, maximize planning opportunities and reduce the time spent on managing tax compliance. Therefore, we assist clients in identifying tax saving opportunities by reviewing their portfolio and associated property tax assessments and liabilities. Through our diligence, we are regularly able to generate huge tax savings for our clients.
Real Estate Kenya

From acquisition to divestiture, effective tax planning and compliance contribute to the value of your real estate portfolio. Granted property taxes are one of the largest recurring operating expenses associated with ownership, owners are often unaware of what items or costs are taxable, what items are being assessed or how their property is being valued.

Answering these and other related questions often produce recurring property tax savings for owners and lessees.

At Property Boutique®, our tax specialists combine industry experience with tax knowledge to help you maximize your profitability. We offer independent, innovative and results-driven property tax services.

Our tax advisory services cover the following:

1. Real Estate Tax Health Checks

Kenya Revenue Authority (KRA) is increasingly becoming aggressive as it seeks to achieve and/or surpass increasing revenue targets. In pursuit of this, tax audits are now commonplace often resulting in backdated tax demands that may be exorbitant, as widely reported in the media. The risks lie in principal taxes, penalties, fines and interest. Moreover, in some cases KRA or the Directorate of Criminal Investigations (DCI) may decide to pursue criminal prosecution for tax evasion, which is classified as an economic crime.

Considering this background, it is critical that real estate owners become proactive and take all the necessary measures to minimize non- compliance risks and tax exposures.

Tax Audits will invariably fall into the following categorization:

  • Compliance audits: These are spot high-level check reviews, which are often conducted in a matter of  days. The review team will focus mainly on compliance with regard to returns filing and payments without much attention on how the figures were generated.
  •  Comprehensive in-depth audits: These will usually cover many tax heads and multiple issues recorded in the books of accounts and will involve a detailed scrutiny of all transactions to determine their accuracy and correctness. In these kinds of audits, the property owner will be required to produce all the records and books of accounts required for examination by KRA officers. Such audits can take weeks or even several months.
  •  Forensic audits: These are investigative audits conducted because of a report of unusual, suspicious or fraudulent activities.

A tax health check audit is conducted by external auditors other than the KRA officers and it involves carrying out a detailed tax compliance review of all or specified tax issues that a company may be facing. The common taxes include PAYE taxes, withholding tax, Value Added Tax (VAT), corporation tax, customs and excise duty.  A tax health check audit enables the business to know the level of risk it might be facing in advance and employ relevant corrective measures in advance. KRA usually encourages voluntary/self- disclosure of back taxes, and regularly offers leniency windows such as amnesty on fines, penalties and interest.  These are often applicable where a voluntary disclosure is made, principal taxes paid in full and a formal application for waiver is lodged with the Commissioner by the defaulting taxpayer.

At Property Boutique®, our Tax Health Checks can help you as our client to:-

  • Establish any inherent tax risks through an in-depth and systematic review of your books of accounts;
  • Establish any risk of, and quantify any potential back-taxes discovered during a review; and
  • Provide advice on the mitigation and settlement of any such liabilities including engagement with KRA for a favourable settlement plan.
2. Property Tax Advisory Services

Property Boutique® has been effective in value negotiation/appeals, resulting in appropriate fair market values and associated liabilities for clients. Our services include: –

  • Real and personal property tax appeal preparation;
  • Property tax consulting and support services including filing of VAT and income tax returns; and
  • Processing land rates and rents on behalf of clients and procuring clearance certificates.
3. Property Tax Due Diligence Services

Property Boutique® can help clients to analyze potential property tax liabilities in real estate transactions into ensure transaction prices realistically incorporate future operating costs related to tax. Our tax due diligence services include:-

  • Determining the tax implications of property related transactions;
  • Advising on opportunities for property tax rebates or deductions available for the real estate projects; and
  • Advising on and setting up the most tax efficient structures for owning or holding property portfolio.
4. Estate Planning and Tax Exemptions Services

At Property Boutique®, we help both individuals and corporates in estate planning matters, and where applicable we undertake tax exemption processes on their behalf. In addition, we also advise clients on the most tax advantageous ways to hold their real estate portfolio or how to minimize any tax exposures. Some of the exemptions we usually process for clients include: –

  • Transfer of property from an individual to a family company;
  • Transfer of property between spouses;
  • Transfer in consideration of gift inter vivos in favor of charitable organizations;
  • Transfer of property between associated companies-usually during restructuring; and
  • Exemption of Land Rates for charitable organizations, where applicable.

For a seller of property, we assist in the computation and processing of capital gains tax (CGT) in a manner that will ensure maximum profit realization and where so required, we also process the appropriate CGT exemptions.

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