Capital Gains Tax on Property in Kenya (2026): Rate, Exemptions and How to Pay

Capital gains tax is the cost sellers forget. Buyers budget for stamp duty and legal fees from day one, but many sellers only discover CGT when the transfer stalls at the Lands office because KRA has not been paid. By then the buyer is anxious, the advocate is chasing, and the seller is doing tax arithmetic under pressure.

This guide covers what capital gains tax in Kenya actually is in 2026, how the 15% is computed, the exemptions that regularly save sellers real money, and the exact payment mechanics — so you can price your sale properly before you list, not after.

What Is Capital Gains Tax in Kenya?

Capital gains tax (CGT) is charged on the profit — the net gain — you make when you transfer property in Kenya: land, houses, apartments, and certain shares. The current rate is 15% of the net gain, and it is a final tax: once paid, that gain is not taxed again in your income tax return.

Two points people commonly get wrong:

• CGT is 15% of the gain, not 15% of the selling price. If you sell at a loss, there is no CGT.
• The seller (transferor) pays — not the buyer. The buyer’s big tax is stamp duty, which we break down in our guide to the real cost of buying property in Kenya.

How the Net Gain Is Computed

The formula is simple:

Net Gain = (Transfer Value − Transfer Costs) − Adjusted Cost of Acquisition

Your adjusted cost is what you originally paid, plus what it cost you to buy, plus what you spent improving the property. Allowable items include:

• The purchase or construction cost;
• Legal fees and valuation fees on both purchase and sale;
• Loan or mortgage interest incurred on the property;
• Enhancement costs — the perimeter wall, the extension, the new roof (keep receipts);
• Advertising and agency costs of finding a buyer.

A Worked Example

Say you bought an apartment in Kilimani in 2018 for KES 9,000,000, paid KES 250,000 in legal and valuation fees, and later spent KES 750,000 on renovations. In 2026 you sell it for KES 14,500,000, paying KES 290,000 in agency commission and KES 150,000 in legal fees on the sale.

• Adjusted cost: 9,000,000 + 250,000 + 750,000 = KES 10,000,000
• Transfer value less selling costs: 14,500,000 − 440,000 = KES 14,060,000
• Net gain: 14,060,000 − 10,000,000 = KES 4,060,000
• CGT due: 15% × 4,060,000 = KES 609,000

Notice how documentation shrinks the bill: without receipts for the renovation and fees, the taxable gain would have been over KES 1.1 million higher. This is one more reason the paper trail we describe in our guide to selling property in Kenya pays for itself.

The Exemptions That Matter

Not every transfer attracts CGT. The most commonly used exemptions in 2026 include:

• Your main home: a private residence you have occupied continuously for at least the three years before the transfer;
• Small agricultural land: agricultural property of less than 50 acres situated outside a municipality or gazetted township;
• Low-value land: land transferred at a value not exceeding KES 3 million;
• Family transfers: transfers between spouses, between former spouses as part of a divorce settlement, to immediate family members, or to a company wholly owned by you and your spouse or immediate family;
• Inheritance: distribution of an estate to beneficiaries is not a taxable transfer (CGT considerations arise when the beneficiary later sells);
• Security transactions: transferring property purely as loan security, and its return by the creditor;
• Group restructuring: internal reorganisations within a corporate group that has existed for at least 24 months, with no transfer to third parties.

Exemptions are claimed, not assumed — your advocate or tax agent declares the exemption on iTax with supporting evidence. If you are unsure whether you qualify, confirm with KRA or a tax professional before pricing your sale.

When and How CGT Is Paid

CGT falls due on the earlier of receiving the full purchase price or registration of the transfer — in practice, it is paid before the transfer can be registered at the Lands office. The mechanics:

1. Log into iTax (itax.kra.go.ke) and file the CGT declaration under the seller’s PIN;
2. Generate a payment slip — it stays valid for 30 days;
3. Pay via bank (cash, cheque or RTGS) at a KRA-appointed bank, or the electronic options offered on the slip;
4. Keep the acknowledgement — the transfer pack presented for registration must show CGT has been handled, or the registration will not go through.

Diaspora sellers can do all of this remotely through an advocate holding power of attorney — the process is the same one we outline for buyers in our diaspora step-by-step guide, run in reverse.

CGT Planning: Legitimate Ways Sellers Reduce the Bill

• Keep every receipt from the day you buy — legal fees, stamp duty, renovations, even the borehole. Each shilling documented is a shilling off your taxable gain.
• Time your sale — if you are close to the three-year continuous occupation mark on your main residence, waiting can eliminate the tax entirely.
• Use the family exemptions properly — restructuring ownership between spouses or into a family company before a future sale has CGT consequences worth mapping with an advocate in advance.
• Never under-declare — the Lands valuation process and KRA cross-checks make understated transfer values an expensive shortcut; penalties and interest outrun any saving.

Frequently Asked Questions

What is the capital gains tax rate in Kenya in 2026?

15% of the net gain on the transfer of property, payable by the seller as a final tax.

Do I pay CGT when selling my own home?

Not if it has been your private residence continuously for the three years before the sale. Occasional or partial occupation can complicate the claim, so document your occupancy.

Is inherited property taxed?

The transfer to beneficiaries under an estate is exempt. If a beneficiary later sells, CGT applies to the gain on that later sale.

What happens if I sell at a loss?

No gain, no CGT. You still file the declaration so the transfer can be registered.

Selling? Price the Tax In From Day One

The sellers who close fastest are the ones whose numbers were honest from the start — asking price, agency fee, legal fees and CGT, all mapped before listing. Block’s advisory team runs that full net-proceeds calculation for every seller we represent, alongside the pricing and marketing plan in our Seller’s Playbook. List with us and you will know your true walk-away figure before the first viewing.

This article is general information, not tax or legal advice. Rates and exemptions can change with each Finance Act — confirm your position with KRA or a tax professional before completing a sale.