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

1. Stamp Duty Tax — Payable at Purchase

Stamp Duty is a one-time tax paid by the buyer when acquiring property. The rates in 2025 are: 4% for urban property and 2% for rural property, calculated on the higher of the purchase price or market value. Payment is due within 30 days of the transfer instrument. Late payment incurs a 5% penalty per quarter — a costly oversight.

2. Capital Gains Tax (CGT) — Payable at Sale

CGT is levied on the gain realised when you transfer property. The current rate is 15% of the net gain (sale price minus original cost, plus allowable improvements). CGT is payable by the seller through the KRA iTax platform. It applies to land, buildings, and even shares in property-owning companies.

Note: CGT does not apply to the transfer of a principal private residence where the owner has lived continuously for at least three years — a meaningful exemption for owner-occupiers.

3. Rental Income Tax — Ongoing Obligation

If you earn rental income in Kenya, you are required to pay tax on it. For residential landlords with gross annual rental income between KES 288,000 and KES 15 million, a flat rate of 7.5% applies on gross rental income under the Monthly Rental Income (MRI) tax regime — a simplified system designed to make compliance easier.

Commercial properties are taxed differently. Non-resident landlords pay a withholding tax of 30% on gross rental income, which is treated as a final tax. Rental income tax returns are filed and paid monthly — by the 20th of the following month.

4. Land Rates — Annual County Tax

Land rates are annual charges levied by county governments on property owners. They fund local services such as waste collection, street lighting, and security infrastructure. The amount depends on the property's location, size, and use classification — not its market value.

5. Land Rent — For Leasehold Holders

If you hold leasehold property (which most Nairobi apartments are), you may be subject to annual land rent payable to the national government. This is separate from county land rates. For many residential units, land rent is a modest annual charge but must be kept current to avoid complications during property transfers.

6. VAT on Commercial Rentals

Commercial property rentals are subject to 16% VAT once your turnover exceeds the VAT registration threshold. If you rent out an office, retail space, or industrial property, you must register for VAT with KRA and remit monthly.

Stay Compliant — Use KRA iTax

All tax obligations for property in Kenya are managed through the KRA iTax platform (itax.kra.go.ke). Diaspora investors can file and pay remotely. Keep your KRA PIN active and returns filed on time to avoid penalties.

Need clarity on property taxes before you buy? Vivara Realty connects buyers with trusted tax and legal professionals. Talk to us at vivararealty.co.ke