In a significant move aimed at providing relief to mortgage holders, the government is proposing an increase in the annual limit for mortgage interest deductions. This initiative, backed by members of parliament, will see the cap raised from the current Sh300,000 to Sh360,000 per year.
Mortgage holders will be able to deduct up to Sh30,000 per month from their taxable income. This adjustment effectively offers homeowners a higher level of tax relief, allowing them to keep more of their earnings while managing their mortgage payments. The amount exceeding this limit will continue to be taxed according to the existing tax brackets.
This change comes as part of a broader strategy to make homeownership more affordable and attractive. By increasing the tax deductions, the government aims to alleviate some of the financial pressures faced by mortgage holders, particularly in a challenging economic environment. This adjustment could also encourage more people to consider homeownership as a viable financial goal.
For the real estate market, this proposed change could have a positive ripple effect. With more disposable income, mortgage holders may find it easier to keep up with their payments, reducing the risk of defaults. This stability could, in turn, boost the confidence of lenders and investors in the housing market.
The proposed increase in mortgage interest deductions is a welcome development for both current and prospective homeowners. As the government continues to seek ways to support the housing sector, this initiative represents a concrete step towards making homeownership more accessible and sustainable for Kenyans.
