Real Estate Taxes in Kenya: A Complete 2025 Guide for Buyers, Sellers, and Investors

Real Estate Taxes in Kenya: A Complete 2025 Guide for Buyers, Sellers, and Investors

By Vivara Realty | Updated Wednesday, 29 October 2025

Buying or selling real estate in Kenya can feel intimidating, especially when it comes to taxes. Many first-time buyers and even seasoned investors overlook the tax side of property ownership — yet it’s one of the most important parts of a successful transaction.

This guide breaks down all real estate taxes in Kenya in simple terms: what they are, who pays them, and how to stay compliant. Whether you’re a homebuyer, seller, or property investor, this is your go-to breakdown of Kenya’s 2025 real estate taxation system.

📘 Table of Contents

1. Taxes When Buying Property in Kenya

   • Stamp Duty Tax

   • Value Added Tax (VAT)

2. Taxes When Selling Property in Kenya

   • Capital Gains Tax (CGT)

3. Taxes on Property Ownership

   • Land Rates

   • Land Rent

4. Taxes on Rental Income

   • Residential Rental Income Tax

   • Commercial Rental Income

   • Withholding Tax on Rent

   • VAT on Commercial Rent

5. Taxes Summary Table

6. Professional Tips

7. Frequently Asked Questions

8. Conclusion
   

🔹 Taxes When Buying Property in Kenya

1. Stamp Duty Tax

A mandatory tax paid by the buyer to legally register property ownership.

• Urban areas: 4% of property value

• Rural areas: 2% of property value

• Deadline: Within 30 days after signing the transfer

• Penalty: Late payment attracts fines and delays title registration

💡 Tip: Always factor stamp duty into your buying budget and confirm payment with the Kenya Revenue Authority (KRA) before completing your transaction.

2. Value Added Tax (VAT)

Applicable only on commercial properties or when buying from a VAT-registered developer.

• Rate: 16% of the selling price

• Residential properties: VAT-exempt

🔹 Taxes When Selling Property in Kenya

1. Capital Gains Tax (CGT)

Charged on the profit earned from selling a property.

• Rate: 15% of net gain (final tax)

• Deadline: Within 20 days after property transfer

• Formula:
  Net Gain = Sale Price – (Purchase Price + Improvement Costs + Legal & Transfer Fees)

✅ CGT Exemptions

• Sale of your personal residence (occupied for the last 3 years)

• Family transfers between spouses or beneficiaries

• Agricultural land under 50 acres outside municipalities

💡 Tip: Keep receipts and records for upgrades and legal fees — they can reduce your taxable gain.

🔹 Taxes on Property Ownership

1. Land Rates

Charged annually by county governments to fund local services.

• Based on the unimproved site value (USV)

• Example (Nairobi): 0.115% of the land’s assessed value

• Deadline: Usually by March 31st each year

• Penalty: 3% monthly interest for late payment

You must obtain a Rates Clearance Certificate before selling any property.

2. Land Rent

Applies only to leasehold titles, paid annually to the national government through the Ministry of Lands.

• Freehold titles: Exempt

• Leasehold titles: Check your title deed for the rent amount

🔹 Taxes on Rental Income

1. Residential Rental Income Tax

For landlords earning Ksh 288,000 – 15 million per year from rent.

• Rate: 7.5% of gross rent (no deductions allowed)

• Payment: Monthly, by the 20th of the following month

• Filing: Through the KRA iTax portal

💡 This tax is final — once paid, no further tax is due on that rent income.

2. Commercial Rental Income

If your property earns over Ksh 15 million annually, it falls under normal income tax rules:

• Individuals: Taxed at graduated rates

• Companies: Taxed at 30% corporate rate

Allowable deductions include repairs, mortgage interest, and management fees.

3. Withholding Tax on Rent

When rent is paid to non-resident landlords, tenants must withhold 30% of the rent and remit it to KRA.

4. VAT on Commercial Rent

If annual rental income exceeds Ksh 5 million, you must register for VAT and charge 16% VAT to tenants.

💼 Taxes Summary Table

🧭 Professional Tips

For Buyers:

• Confirm stamp duty and land rates are cleared before transfer

• Include taxes in your purchase budget

• Conduct due diligence via KRA and county portals

For Sellers:

• Keep records of all acquisition and improvement costs

• Apply CGT exemptions where possible

• Time your sale strategically to manage tax impact

📌 Frequently Asked Questions

1. What taxes must I pay when buying property in Kenya?
Stamp Duty and, for commercial property, VAT.

2. Who pays Capital Gains Tax?
The seller (transferor).

3. What is the current rate of Capital Gains Tax in Kenya?
15% of the net gain.

4. How much is residential rental income tax in 2025?
7.5% of gross rent (final tax).

5. What happens if I don’t pay my property taxes?
You may face penalties, interest, and delays in title processing or property sale.

🏆 Conclusion

Understanding real estate taxes in Kenya is simpler than it seems. From Stamp Duty and Capital Gains Tax to Land Rates and Rental Income Tax, compliance ensures peace of mind, faster transactions, and higher returns.

At Vivara Realty, we believe informed buyers and investors make smarter property decisions.
For personalized tax or property advice, reach out to our team — we have licensed tax consultants and real estate legal advisors ready to assist you.