Capital Gains Tax (CGT) in Kenya: Property Transfer Guide 2026

📅 10 June 2026 · ✅ Last verified: 12 October 2026 · 📖 7 min read · Tax & KRA

Black Kenyan professional reviewing a property transfer folder beside keys and a capital-gains calculator — Original editorial artwork; no official interface or endorsement depicted.

⚠️ Note: Tax regulations and rates are subject to change. Always verify current information with the Kenya Revenue Authority (KRA) or a certified tax professional before making financial decisions. The CGT rate in Kenya is currently 15% of the net gain.

If you are planning to sell land, buildings, or shares in a private company in Kenya, you must account for Capital Gains Tax (CGT). Introduced to capture the value appreciation of assets, CGT is a crucial consideration for property developers, investors, and SMEs holding significant assets.

This comprehensive guide explains everything you need to know about Capital Gains Tax in Kenya in 2026, including current rates, exemptions, calculation methods, and the filing process.

1. What is Capital Gains Tax (CGT)?

Capital Gains Tax (CGT) is a tax levied on the net gain (profit) realized from the transfer (sale, exchange, or disposition) of property situated in Kenya. "Property" in this context primarily refers to land, buildings, and shares in privately held companies.

Key Facts about CGT in Kenya:

Who Pays: The transferor (the seller) is responsible for declaring and paying CGT.
Tax Point: CGT is payable by the earlier of the date the full purchase price is received and the date the transfer is registered, under the applicable statutory rule.
Final Tax: CGT is a final tax. Once you pay the CGT on a transaction, that specific gain is not subject to further taxation (like corporate or individual income tax).

2. The Current CGT Rate (2026)

As of 2026, the Capital Gains Tax rate in Kenya is 15% of the net gain. This rate was increased from the previous 5% effective 01-01-2023, and remains at 15% today.

3. How to Calculate the Net Gain

CGT is only paid on the gain (profit), not the total selling price. To determine the taxable amount, you use the following formula:

Net Gain = Transfer Value (Selling Price) - Adjusted Cost

What is the Transfer Value?
The transfer value is the amount received or receivable for the property. It is essentially the selling price.

What is the Adjusted Cost?
The adjusted cost includes:

Acquisition Cost: The original purchase price of the property.
Incidental Costs on Acquisition: Expenses incurred when buying the property (e.g., stamp duty, legal fees, valuation fees, agent commissions).
Enhancement Costs: Money spent on capital improvements to the property that increase its value (e.g., building a perimeter wall, extending a building). Routine maintenance or repair costs do not qualify.
Incidental Costs on Transfer: Expenses incurred when selling the property (e.g., legal fees, advertising costs, agent commissions).

Calculation Example

You bought land for KES 2,000,000. You spent KES 100,000 on legal fees and stamp duty during purchase. You built a wall costing KES 500,000. Years later, you sell it for KES 5,000,000 and pay a broker KES 150,000 to find a buyer.

Transfer Value: KES 5,000,000
Adjusted Cost: KES 2,000,000 (purchase) + KES 100,000 (buy costs) + KES 500,000 (wall) + KES 150,000 (sell costs) = KES 2,750,000
Net Gain: KES 5,000,000 - KES 2,750,000 = KES 2,250,000
CGT Payable (15%): 15% of KES 2,250,000 = KES 337,500

4. Exemptions from Capital Gains Tax

Not all property transfers attract CGT. The Income Tax Act provides several exemptions. You will not pay CGT on:

Low-Value Transactions: Transfer of land valued at KES 3 million or less, where the transfer is by an individual.
Agricultural Land: Transfer of agricultural property having an area of less than 50 acres (if situated outside a municipality, gazetted township, or an area assessed for rating purposes).
Inheritance/Estates: Property transferred or sold for the purpose of administering the estate of a deceased person (transfers from a personal representative to a beneficiary).
Family Transfers: Transfers of property between immediate family members (spouses, or parents to children).
Primary Residence: Sale of a private residence if the individual has occupied it continuously for the three years immediately preceding the transfer.
Securities: Transfer of shares traded on the Nairobi Securities Exchange (NSE).
Loan Security: Transfer of property solely for the purpose of securing a debt or loan.

Note: Even if a transaction is exempt, you must still apply for a CGT exemption certificate via iTax to complete the land transfer process.

5. Step-by-Step Guide: How to File and Pay CGT

Filing and paying Capital Gains Tax is done entirely online through the KRA iTax portal.

Log into iTax: Access your KRA iTax profile using your PIN and password.
Navigate to Returns: Click on the Returns menu and select File Return.
Select Tax Obligation: Choose Income Tax - Capital Gains Tax (CGT) and download the Excel return form.
Fill the Excel Form:
- Enable macros in Excel.
- Enter details of the property, the buyer (transferee PIN), transfer value, and all allowable adjusted costs.
- The form will automatically calculate the Net Gain and the 15% tax due.
- Validate the form to generate a zip file.
Upload the Return: Go back to iTax, upload the generated zip file, and submit. You will receive an Acknowledgement Receipt.
Generate Payment Slip:
- Go to the Payments menu and select Payment Registration.
- Select Tax Head: Income Tax and Tax Sub Head: Capital Gains Tax.
- Select the liability (the return you just filed) and generate the Payment Slip (PRN).
Make Payment: Use the PRN to pay via M-Pesa (using KRA Paybill 572572 and PRN as the account number) or at a partner bank.

Once payment is confirmed, KRA will issue a CGT certificate, which is usually required by the Ministry of Lands to process the final transfer and issue the new title deed.

6. Common Mistakes to Avoid

CGT Tax Point: Pay at the earlier of receipt of the full purchase price or registration of the transfer (Eighth Schedule, paragraph 11A). Late payment attracts a 5% penalty on tax due and payable under section 83A of the Tax Procedures Act, plus simple interest at 1% per month or part-month on unpaid tax under section 38, subject to its statutory limits.
Under-declaring Value: Do not under-declare the selling price to reduce tax. KRA frequently utilizes government valuers. If the declared value is significantly lower than the market value, KRA will assess tax based on the market value.
Losing Receipts: Keep receipts for all incidental and enhancement costs. Without proof, KRA may disallow these deductions, increasing your taxable gain.

Navigating property taxes can be complex, especially for high-value commercial transactions. When in doubt, consult a KRA-certified tax agent or property lawyer to ensure full compliance and optimize your allowable deductions.

7. Frequently Asked Questions

What is Capital Gains Tax (CGT)?

CGT is a tax on the gain made when you transfer certain assets, such as land or buildings. It applies to the net gain, not the full sale price.

What is the current CGT rate in Kenya?

The guide's verified rate is 15% of the net gain for qualifying transfers — confirm the current rate and any exemptions with KRA before filing.

What is exempt from Capital Gains Tax?

The article lists the exemptions — check the Exemptions section in the guide, and confirm your situation with KRA.

How do I file and pay CGT?

The guide has a step-by-step section (calculate the net gain, file the return, pay) — follow it, and use iTax for filing.

⚠️ Disclaimer: This guide is educational information, not legal, tax, employment, or investment advice. Confirm current requirements with the relevant authority or a qualified professional before acting.

Sources and update record

Updated 26 October 2026: Corrected the land exemption, payment trigger and current late-payment penalty and interest.