If you’re buying, selling, leasing, or investing in property, understanding Real Estate Taxes You Must Know in Kenya is essential. Many Kenyans get caught off guard by hidden tax obligations, fines, or delays simply because they didn’t plan.
Whether you own land, rent out apartments, or want to sell your family plot, this 2025 guide explains the key real estate taxes you must know in Kenya, how they’re calculated, and what you should do to stay compliant and avoid penalties.
Below is a list of Real Estate Taxes You Must Know in Kenya.
1. Stamp Duty
Stamp Duty is a mandatory tax payable to the Kenya Revenue Authority (KRA) when transferring land or property. It’s one of the most significant costs for buyers after the purchase price.
✅ How It Works:
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The buyer pays stamp duty before the title deed transfer.
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The rate is 4% of the property’s value in urban areas and 2% for rural land.
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The amount is calculated based on the property’s market value, determined by a government valuer, not necessarily the price agreed with the seller.
✅ Example: If you buy an apartment worth KES 10 million in Nairobi, you’ll pay KES 400,000 in stamp duty.
📌 Tip: Always budget for this upfront. Without stamp duty, the Ministry of Lands will not process the title transfer.
2. Capital Gains Tax (CGT)
Capital Gains Tax applies when you sell land or property in Kenya. It’s charged on the profit you make.
✅ How It Works:
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CGT is 15% of the net gain.
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Net gain = Selling price minus (original purchase price + legal fees + improvement costs).
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The seller pays CGT within 30 days of the transfer of the property.
✅ Who Pays?
The seller, not the buyer.
✅ Exemptions:
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Property transferred through inheritance.
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Land sold for under KES 3 million (if you own only that one piece).
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Land used for agriculture not exceeding 50 acres outside municipalities.
✅ Example: You bought land for KES 2 million and sold it for KES 5 million, your gain is KES 3 million. You pay 15% of KES 3 million, which is KES 450,000.
📌 Tip: Always declare the gain honestly to avoid hefty fines or legal trouble.
3. Land Rates
Land Rates are annual taxes paid to your county government for land located within municipalities.
✅ How It Works:
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Paid by owners of leasehold and freehold properties.
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Charged annually as a percentage of the unimproved site value.
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Set by the county government (rates vary by county).
✅ Why You Must Pay:
Unpaid land rates can result in penalties, the auction of your property, or the refusal to approve transactions such as transfers or new titles.
📌 Tip: Always ask the seller for rate clearance certificates before buying any land.
4. Land Rent
This is different from land rates. Land Rent applies only to leasehold properties, where the government remains the ultimate owner.
✅ How It Works:
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Annual payment to the Ministry of Lands.
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Usually, a small fee per acre or plot.
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Must be cleared annually.
📌 Tip: Always check that land rent is paid up before buying leasehold land. A land rent clearance certificate is required for title transfers.
5. Rental Income Tax
If you rent out residential or commercial property, you must declare the income to KRA.
✅ How It Works:
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Residential rental income up to KES 15 million per year is taxed at 7% of gross rent under the Residential Rental Income Tax regime.
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No deductions allowed—just 7% of gross rent collected.
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Must file monthly by the 20th of the following month.
✅ For Commercial Property:
Commercial rental income is taxed under normal income tax rules:
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Taxed at the standard 30% on net income (gross rent minus allowable expenses like repairs, insurance, and agent fees).
📌 Penalties:
Failure to declare rental income can attract penalties and back taxes with interest.
✅ Tip: Keep proper records and use KRA’s iTax system to file on time.
6. Value Added Tax (VAT) on Commercial Property
Not all real estate is subject to VAT, but if you develop or sell commercial property, it may apply.
✅ How It Works:
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VAT is charged at 16% on the sale or lease of commercial buildings.
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Residential property sales are exempt from VAT.
Example: If you sell office space worth KES 20 million, you may have to charge an extra KES 3.2 million as VAT.
7. Withholding Tax
If a tenant pays rent to a non-resident landlord, they must withhold and remit tax to KRA on the landlord’s behalf.
✅ Rate:
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10% for non-resident landlords.
This ensures that foreign property owners pay local taxes.
8. Transfer Fees
When transferring land, additional fees may include:
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Registration fees (KES 500–1,000)
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Consent fees (Land Control Board for agricultural land)
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Lawyer’s fees (1%–2% of the property value)
These are not taxes per sale, but are essential transaction costs to budget for.
Key Tips to Manage Real Estate Taxes You Must Know in Kenya
✔️ Work with Professionals:
Always consult a licensed tax advisor or lawyer when buying, selling, or leasing property.
✔️ Stay Updated:
Tax rules change. For example, rose from 5% to 15% in 2023. More adjustments could come.
✔️ Get Clearance Certificates:
When selling, ensure you have:
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Rates clearance certificate
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Land rent clearance certificate
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Tax compliance certificate
✔️ Use KRA’s iTax:
Declare taxes on time to avoid fines and interest.
Penalties for Non-Compliance
Failure to pay or declare real estate taxes can lead to:
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Penalties of up to 5% of the unpaid tax.
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Daily interest on overdue amounts.
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Freezing of title transfers or registrations.
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Legal prosecution.
Conclusion
Taxes are unavoidable for property ownership and investing in Kenya. From stamp duty and CGT to land rates and rental income tax, staying informed and compliant protects your investment and avoids legal trouble.
So, whether you’re buying your first plot in Kitengela, selling apartments in Nairobi, or renting out offices in Mombasa, Real Estate Taxes You Must Know in Kenya.
Reach out to our sales team for more information on the process for property ownership in Kenya.
Call: 0722 716182 | 0720 469 282
Email:sales@ownitkenya.com
www.ownitkenya.com
