In this show, Elizabeth Nakiru hosts Hafsah Seguya from Tax Education to enlighten taxpayers on Rental Income Tax.
Hafsah elaborates on 2020/2021 and the 2021/2022 Rental Income tax regimes as a way of allowing the guests to digest the current rental regime.
First; a Rental Income tax is a tax levied on income earned by a person from letting out an immovable property (land and buildings) in Uganda. For Income tax purposes it does not matter whether the building is let out as a residence or for commercial purposes. Property is let out by a landlord or landlady to another person also known as a tenant for consideration.
A person (landlord or landlady can be an individual or non-individual.
Below is the 2022/2023 rental regime and computation of Rental Income Tax
a) Individuals
In determining the tax due for individuals, the threshold for payment of tax is Shs. 2,820,000 and no other deductions are allowed.
Step 1; Determine the total annual gross rent from all sources of the Individual
Step 2; Deduct the threshold of Shs.2,820,000 i.e. (Rental Income -2,820,000)
Step 3; Determine rental income tax at 12% i.e., 12%(R-2,820,000)
b) Rental Tax for partnerships
Rental Income Tax for Partnerships is assessed on individual partners according to their respective sharing using the following steps.
Step 1: Determine the total annual gross rent of individual partners; say R;
Step 2: Deduct the threshold of shs.2, 820,000;
Therefore, a chargeable rental income= R- 2,820,000
Step 3: Determine rental Income tax at 12% i.e., 12% (R-2,820,000)
c) Rental Income Tax for Companies and corporations
In computing rental income tax for companies/corporations, the following steps are considered:
Step 1:
Determine the total annual gross rent from all sources of the company; say R;
Step 2:
Deduct up to 50% of the annual gross rental income as allowable expenses;
Therefore, chargeable rental Income = R-50%R
Step 3
Determine rental income at 30% i.e., 30% (R-50%R)
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