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Explain the following: (b) Concept of residence for incorporated entities. (c) Deductions allowed against rental income

      

Explain the following:
(b) Concept of residence for incorporated entities.
(c) Deductions allowed against rental income

  

Answers


Wilfred
Concept of residence for incorporated entities.
A limited company is considered residence in Kenya if:
i) It was registered in Kenya
ii) It was not registered in Kenya but the board meetings took place in Kenya i.e. management and control was exercised in Kenya
iii) It was declared residence by the minister of finance through a notice in the Kenya Gazette

Deductions allowed against rental income.
Rent is an income from rights granted to another person for use or occupation of any property.
Allowable deductions on rent income
- Expenses incurred on structural alterations to the premises where such alteration are necessary to maintain the existing rent
- Maintenance expenditure on the up keeps of the property which includes land rent and rates.
Salary and wages insurance, repairs etc.
- Bad debts in the form of unrecoverable rent
- Interest on mortgage taken to set up the property
- Legal cost on debt recovery and in defense of property rights.
- Legal cost in respect of acquisition of a lease for a period of not more than 99 years
- Capital allowances related to the use of the building
- Reasonable advertising and promotional costs
- Management fees or commission paid to property agents
- Expenditure incurred in the regular inspection of premises by the landlord or his agent
Wilfykil answered the question on February 13, 2019 at 13:43


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