Over the years, it has been difficult for many to buy or build a residential house. Most have been scared off by the financial aspect of House Ownership. The 1995/ 1996 budget offered new incentives for prospective house owners. The time is now ripe for many Kenyans to own houses and earn peace of mind. With this in mind, we have designed a plan, which will enable you to either:-
- Save a lump sum to purchase or build a permanent house
- Save a lump sum for Deposit, Legal fees and Stamp duty payable to acquire a mortgage.
- Save a lump sum to purchase a plot and build a permanent house.
- Save some of the tax you are already paying.
The minimum contribution into the plan is Kshs. 1,000/- per month. There is no limit as to how much one can contribute regularly. One can also deposit lump sums during the duration of the plan. The minimum term of the plan is 5 years and the maximum is 10 years.
Contributions into the plan of up to 4,000/= per month are exempted from taxation. This may amount to Kshs. 1,200/= per month or Kshs. 14,400/= per annum. This is the maximum tax savings for the person who is in the 30% tax bracket. Also, note that your savings will accrue interest free of taxation.
Withdrawals made before maturity of the plan shall attract taxation on the amount involved if the funds are not utilized towards building or purchase of a house as is intended in this plan.
At maturity the entire fund shall be paid to the member free of tax and the same utilized towards building or purchase of a house and any amounts not utilized towards this purpose shall be subject to taxation.
The plan is designed for that person who does not own a house. It is therefore a requirement under the Income Tax Act that each new depositor in the scheme submits an affidavit confirming that he/she does not own a house. It is on the basis of this document that the tax benefits mentioned shall be effected.
Our Home Ownership Savings Plan therefore gives you the ultimate solution by enabling you to save for your dream House.