Introduction
Capital Gains Tax (CGT) in Kenya is a 15% tax on profits from selling property, land, or unlisted shares. Since its reintroduction in 2015, CGT has evolved—with new exemptions and special rates in 2025.
Whether you’re selling land, a house, or shares, understanding how CGT works, how to calculate it, and filing deadlines is crucial to avoid penalties. This guide breaks it all down.
1. What is Capital Gains Tax (CGT)?
CGT applies to the net profit earned from selling:
✅ Land & Buildings (commercial or residential)
✅ Unlisted Shares (shares not traded on the Nairobi Securities Exchange)
✅ Other Capital Assets (as defined by KRA)
Who Pays CGT?
- The seller (transferor) is responsible for declaring and paying CGT.
- The tax applies regardless of when the property was acquired.
2. CGT Rates in 2025
| Transaction Type | Tax Rate |
|---|---|
| Standard Rate (Most property & share sales) | 15% |
| Reduced Rate (NIFCA-certified investments) | 5% |
Who Qualifies for the 5% Rate?
To benefit from the lower 5% CGT rate, an investor must:
✔ Invest at least KSh 3 billion in a Kenyan entity.
✔ Hold the investment for a minimum of 5 years.
✔ Obtain certification from the Nairobi International Financial Centre Authority (NIFCA).
3. How to Calculate CGT (Step-by-Step Formula)
The formula for determining CGT is:
Net Gain = (Transfer Value) – (Acquisition Cost + Incidental Costs on Purchase + Enhancement Costs) – (Incidental Costs on Sale)
Example Calculation:
- Sale Price (Transfer Value): KSh 10,000,000
- Purchase Price (Acquisition Cost): KSh 6,000,000
- Incidental Purchase Costs (Legal Fees, etc.): KSh 200,000
- Improvement Costs (Renovations, etc.): KSh 300,000
- Selling Costs (Agent Fees, etc.): KSh 100,000
Net Gain = 10,000,000 – (6,000,000 + 200,000 + 300,000) – 100,000 = KSh 3,400,000
CGT Payable = 15% of 3,400,000 = KSh 510,000
4. How to Pay CGT in Kenya (2025 Guide)
Deadline:
CGT must be paid before the property transfer is registered OR upon receiving full payment—whichever comes first.
Step-by-Step Payment Process:
1️⃣ Log in to KRA iTax Portal
2️⃣ Go to Payments > Payment Registration
3️⃣ Select:
- Tax Head: Income Tax
- Sub-Head: Capital Gains Tax
4️⃣ Enter transaction details (sale price, purchase cost, etc.)
5️⃣ Generate a payment slip & pay via: - Bank (RTGS/Cheque)
- Mobile Money (if applicable)
5. Key CGT Exemptions in 2025
✅ Inheritance Transfers (property transferred to heirs after death)
✅ Divorce Settlements (transfers between spouses)
✅ Donations to Charities (property given to registered NGOs)
✅ Government Compulsory Acquisitions (if no profit is made)
6. Penalties for Non-Compliance
⚠ Late Payment: 20% penalty + 1% monthly interest on unpaid tax.
⚠ False Declarations: Additional fines or legal action by KRA.
Pro Tip: Always keep records of purchase agreements, receipts, and improvement costs to justify deductions.
Final Thoughts
Capital Gains Tax can significantly impact your profits from property or share sales. By:
✔ Calculating CGT correctly
✔ Paying on time
✔ Using available exemptions
You can avoid penalties and maximize your returns.
📢 Need expert tax advice? Consult a KRA-registered tax agent for personalized guidance!
