How KRA Capital Gains Tax Works on Property Sales in Kenya

If you sell property in Kenya, KRA tax experts on Kaziiko will tell you the same thing they tell every seller: capital gains tax is not optional and it costs more than many people expect. The tax is paid within 30 days of the transfer through iTax, and the Lands Registry will not register the sale until you have paid it or received a clearance certificate. It is not a new tax, but since the rate increased from 5% to 15% on 1 January 2023, many sellers are caught off guard at the closing table.

What capital gains tax actually is

Capital Gains Tax is a tax on the profit (the "gain") you make when you transfer property situated in Kenya, charged on the difference between what you sell the property for and what it cost you to acquire and improve it — not on the full sale price. This matters. If you bought land for KSh 2 million and sell it for KSh 7 million, KRA does not tax the full KSh 7 million. You only pay tax on the KSh 5 million gain.

Capital Gains Tax is payable by the person who has transferred property (seller), not the buyer. The buyer pays stamp duty. The seller pays capital gains tax. This is a critical detail many people get wrong when budgeting for a sale.

How the rate works: 15% of net gain

The current rate of CGT in Kenya is 15% of the net gain. The formula is simple: Sale price minus all allowable costs, then 15% of that result.

The allowable costs matter. Allowable costs include what you spent improving the property, plus legal fees, stamp duty and agent commissions on both buying and selling. If you built a fence, sunk a borehole, or paid for renovations, these expenses reduce your taxable gain if you kept receipts. Sellers who lose records often pay more tax than they owe. A single missing receipt for KSh 100,000 in improvements costs you an extra KSh 15,000 in tax.

CGT is a final tax, meaning the gain is not subject to any further income tax once CGT is paid. You do not add this gain to your other income for further taxation. You pay 15%, it is done.

Key exemptions (but you must apply)

Not all property sales are taxed. Your private home (lived in for at least three years), inherited property and transfers to family are exempt, and NSE-listed shares are not subject to CGT. But these exemptions are not automatic.

Exemptions are not automatic — in most cases you must apply through iTax and obtain KRA's confirmation. Do not assume your sale is exempt without written confirmation, because the Lands Registry will still expect a CGT clearance before registering the transfer. Many sellers think their family transfer or inherited property is automatically exempt. It is not. You still need to file the return through iTax and get KRA's clearance letter before the Lands Registry will complete the transfer.

How to pay on iTax

Log in to your iTax account and select the Capital Gains Tax return, enter the property details — acquisition date and cost, disposal date and price, and all allowable deductions — and upload supporting documents, then the system computes the net gain and the 15% tax payable. The steps take time but are straightforward once you gather your documents.

Pay the tax (via bank or mobile money using the payment registration number) within 30 days of the transfer. KRA issues a CGT clearance, which your advocate submits to the Lands Registry so the title can be transferred to the buyer. If you miss the 30-day window, KRA begins charging penalties.

If the property sale makes a loss — you sold for less than you paid — no CGT is due. But you still must file a return showing the loss, or you risk penalties for non-compliance.

What happens if you do not pay

KRA imposes a 25% penalty on unpaid tax plus 1% monthly interest on overdue amounts. A KSh 750,000 unpaid tax bill becomes KSh 937,500 with penalties. And without the CGT clearance, the Lands Registry will not register the transfer. The buyer's advocate will push back. The deal stalls. The cost of not planning for this tax is higher than the tax itself.

Many sellers in Nairobi and Mombasa wait until the last moment to file, only to find the iTax portal slow or their documents rejected for missing details. File early. Upload all receipts. Have a verified Kenyan expert on Kaziiko review your gain calculation before submitting.

Frequently Asked Questions

Is CGT charged on the full sale price?

No. CGT is charged at 15% on the net gain — the sale value minus your documented acquisition cost, improvements and incidental costs.

Can I avoid capital gains tax by gifting property to my children?

Transfers to immediate family are exempt from CGT, but you must file the return through iTax and obtain KRA's clearance. Do not assume it is automatic.

What if I sell at a loss?

If you sell for less than you paid, you owe no tax. But you must still file a return on iTax showing the loss, or face penalties for non-filing.

Who pays CGT, the buyer or seller?

Capital Gains Tax is payable by the person who has transferred property (seller). The buyer pays stamp duty instead.