Capital Gains Tax When You Sell Land in Kenya

When you sell land in Kenya, you as the seller pay capital gains tax of 15 percent of your gain, not of the full price. The gain is what you sold for, less your selling costs, less what the land cost you. You must pay by the earlier of two dates: when you receive the full price, or when the transfer is registered.

The rate and who pays

The rate is in paragraph 14, Head B of the Third Schedule to the Income Tax Act. It is 15 percent and it is a final tax, so the same gain is not taxed again. It rose from 5 percent on 1 January 2023.

The Finance Act 2026 left this rate alone. Its capital gains changes deal with share sales by non-residents, transfers to registered real estate investment trusts, and a cost rule for certain company reorganisations.

The tax also covers land you bought before 2015: paragraph 2 of the Eighth Schedule.

How to work out your gain

The formula comes from paragraphs 4, 7, 8 and 10 of the Eighth Schedule:

Gain = (sale price less selling costs) less (purchase cost plus buying costs plus improvement costs)

• Selling costs include agent, legal and valuer fees, and the cost of advertising for a buyer.
• Buying costs include legal and survey fees, stamp duty and mortgage costs you paid when you bought.
• Improvement costs are amounts spent wholly on enhancing or preserving the land’s value, and on establishing or defending your title.

You cannot count a cost you have already claimed against other income: paragraph 11. Claim only what you can prove, so find your old agreement, stamp duty receipts and invoices before you sell.

Example. You bought a plot for KES 2,000,000 and paid KES 100,000 in legal fees and stamp duty. You sell it for KES 5,000,000 and pay KES 200,000 in agent and legal fees.

Item	KES
Sale price less selling costs	4,800,000
Purchase and buying costs	2,100,000
Gain	2,700,000
Tax at 15 percent	405,000

If the price is not a real market price

If you sell to a relative at a low price, or the sale is otherwise not at arm’s length, paragraph 9 replaces the agreed price with the market value. KRA can decide what that value is. Writing a lower price into the agreement does not change the tax, and a false statement to KRA can carry a penalty of 75 percent of the shortfall: Tax Procedures Act, section 84.

When and how to pay

Paragraph 11A sets the due date as the earlier of receiving the full purchase price or registering the transfer. KRA’s FAQ page describes the tax point as registration. Where the two differ, the law’s wording is the safer one to follow. If the buyer pays you in full before registration, treat the tax as due then.

KRA’s capital gains page gives the payment route:

1. Log in to iTax and go to Payments, then Payment Registration.
2. Choose Income Tax as the tax head, and Capital Gains Tax as the sub-head.
3. Enter the transaction details and submit.
4. Pay using the slip it produces.

KRA’s page sets out these payment steps but does not describe a separate return. Ask your Tax Service Office whether anything more is needed for your sale, and keep your computation with your records.

Late payment carries a 5 percent penalty (section 83A) and interest of 1 percent a month (section 38).

Sales that may be exempt

These come from paragraph 36 of the First Schedule and apply to individuals:

• Low value land: land where the transfer value is not more than KES 3 million.
• Small farms: agricultural property of less than 50 acres outside a municipality, gazetted township or declared urban area.
• Your home: a private residence you have lived in continuously for the three years before the sale. This includes the land around it used only for personal purposes, but not any part used for business. You can claim only one home at a time, and a couple living together can claim only one between them.

Paragraph 3 of the Eighth Schedule also takes the gain out of capital gains tax where it is taxed elsewhere. If you trade in land as a business, your profit goes through normal income tax instead.

Transfers within a family and inherited land have their own rules. We cover these in a separate guide.

Common mistakes

• Taxing the full price. The tax is on the gain, so a good cost record matters.
• Not checking an exemption before the sale. Confirm that you meet the conditions, especially for a home that you also rented out or ran a business from.
• Waiting for registration when the full price has already arrived. Interest may already be running.
• Having no records. Keep the file for at least five years after the sale: section 23. Simple bookkeeping habits help, and they keep your sale figures apart from your other income.

If KRA later disagrees with your figures, you have the right to object to its assessment. For help with the computation, our tax team can review it with you before you pay.