1. Land Rates (Property Rates)

Payable to: County Government
Applies to: All land within municipalities and urban areas

Land rates are annual charges levied by county governments on land ownership. The amount payable is based on the unimproved site value of the land, not the buildings constructed on it.

Key points:

• Charged annually
• Varies by county (e.g. Nairobi, Kiambu, Machakos)
• A rates clearance certificate is required before property transfer or sale

Failure to pay land rates can lead to penalties and delays during transactions.

2. Ground Rent

Payable to: National Government (Ministry of Lands)
Applies to: Leasehold land only

Ground rent is an annual payment required for leasehold properties, as stipulated in the lease agreement.

Important notes:

• Amount depends on lease terms
• Must be cleared when renewing or extending leases
• Freehold land does not attract ground rent

3. Stamp Duty

Payable to: Kenya Revenue Authority (KRA)
Applies to: Transfer of property ownership

Stamp duty is a mandatory tax paid when property ownership changes hands.

Rates:

• 4% of property value for urban properties
• 2% of property value for rural properties

Stamp duty is calculated on the higher of the sale price or the government valuation and must be paid before registration of the transfer.

4. Capital Gains Tax (CGT)

Payable to: Kenya Revenue Authority (KRA)
Applies to: Sale or transfer of property

Capital Gains Tax is charged on the profit made from selling property.

Key details:

• Rate: 15% of net gain
• Net gain = Selling price minus acquisition and improvement costs
• Paid by the seller
• Due within 30 days of transfer

Certain exemptions may apply, such as transfers between spouses or inheritance in specific circumstances.

5. Rental Income Tax

Payable to: Kenya Revenue Authority (KRA)
Applies to: Landlords earning rental income

a) Residential Rental Income Tax (RRIT)

• Rate: 10% of gross rental income
• Applies where annual rental income is between KES 288,000 and KES 15,000,000
• Paid monthly

b) Normal Income Tax

• Applies if annual rental income exceeds KES 15 million
• Taxed at progressive individual rates or 30% for companies

6. Value Added Tax (VAT)

Payable to: Kenya Revenue Authority (KRA)
Applies to: Commercial property and short-term accommodation

VAT is charged at 16% on:

• Commercial rental income
• Hotels, serviced apartments, and short-stay accommodation (e.g. Airbnbs)

Long-term residential rentals are VAT-exempt, making them more tax-efficient for many investors.

7. Property Transfer and Registration Charges

Payable to: Ministry of Lands

While not technically taxes, these statutory charges are unavoidable during property transactions. They include:

• Registration fees
• Title search fees
• Consent fees (including Land Control Board approvals where applicable)

8. County Levies and Service Charges

Payable to: County Government
These vary by county and property use and may include:

• Garbage collection fees
• Fire inspection fees
• Building permits and approvals
• Single business permits for commercial properties

Understanding property taxes can make the difference between a smart investment and an expensive mistake. Whether you are buying, selling, or investing in property, getting the right advice early helps you save time, money, and stress.

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