Capital Gains Tax on Property

Understanding CGT when selling property in Kenya.

What is Capital Gains Tax?

In Simple Terms

Capital Gains Tax (CGT) is a tax on the profit you make when you sell a property or other asset. It's calculated as 5% of the gain (profit) you make from the sale. The gain is the difference between what you sell it for and what you originally paid (plus improvements).

Worked Example

You bought a property for KES 5 million and sell it for KES 8 million:

Sale price:KES 8,000,000
Less: Purchase price:-KES 5,000,000
Less: Improvements:-KES 500,000
Capital gain:KES 2,500,000
CGT (5% of gain):KES 125,000

When Does CGT Apply?

CGT Applies To:

  • Sale of land and buildings
  • Transfer of property ownership
  • Property exchanges

Exemptions

  • Sale of your main residence (up to certain limits)
  • Property inherited (no CGT on inheritance)
  • Property transferred between spouses
  • Property sold for less than purchase price (no gain = no tax)

Filing Requirements

  • CGT must be paid within 30 days of the sale
  • File CGT return through iTax portal
  • Keep all documents (sale agreement, purchase documents, receipts)