Capital gains tax to be paid after property transfer

Monday, March 16, 2015 — updated on December 25, 2020 - 2 min read

KRA commissioner of domestic taxes, Alice Owuor (right) with the commissioner general John Njiraini at a past event. The capital gains tax applicable on real estate will be paid at the point of payment of stamp duty, KRA has said. FILE PHOTO | DIANA NGILA |

What you need to know:

CGT will be applied effective on the date of transfer of the property should the date for payment for the property and transfer be different.

The capital gains tax (CGT) applicable on real estate will be paid at the point of payment of stamp duty, the Kenya Revenue Authority has said.

Stamp duty is currently set at four per cent of the worth of a property, but the CGT is set at five per cent of the net gain when a property changes hands in a financial transaction.

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The CGT will be applied effective on the date of transfer of the property should the date for payment for the property and transfer be different. This means that tax becomes due as soon as the transfer is approved by the lands authorities and the other parties to the transaction.

“Payment of capital gains tax shall be made at the same time that payment for stamp duty on such transfer is made,” said the KRA commissioner of domestic taxes, Alice Owuor.

In a statement Monday, KRA said the tax was applicable on all property transfers from January 1, 2015.

The authority clarified that even if the property was acquired before January 1 but the gain was received on or after that date, the tax shall be paid.

“CGT is a tax chargeable on the whole of a gain which accrues to a company or an individual on or after January 1, 2015 on the transfer of property situated in Kenya, whether or not the property was acquired before January 1, 2015,” said Ms Owuor.

To ensure prompt payment, the authority gave the account number into which CGT cash will be paid at the Central Bank of Kenya.

“Upon transfer of land or buildings, the tax shall be paid by the transferor into the Capital Gains Tax collection Account No. 100223577 at the Central Bank of Kenya; through the commercial banks,” said Ms Owuor.