Stamp Duty Kenya & Stamp Duty on Land Transfer
Stamp duty is the tax the government places on legal documents used to transfer properties or assets. Stamp duties also known as stamp taxes, are imposed on documents required during a legal recording of certain types of transactions. This blog will discuss everything you need to know about stamp duty in land transfer.
Who Pays for The Stamp Duty in Kenya
Stamp duty in Kenya is paid to the government by the property buyer. It’s paid based on how much the property is worth at a rate of 2% for any property outside a municipality and 4% for properties within a municipality. However, a property buyer must ensure the property transfer is done formally at the land registry. This will protect you from paying more than you are required. Besides, you will not pay more even after your property appreciates. Instead, your stamp duty payment will be based on the current value of your property.
Are There Stamp Duty Exemptions
Ignorance is costly, especially when it comes to land matters. You need to know everything when transferring properties, and one of the amazing things to note is that there are exemptions for stamp duties. KRA gives the exemptions, and you must take advantage of them. Below are some of the stamp duty exemptions you need to know about.
- Transfer of property between spouses.
- Transfer family property to the members after the death of a family member whose property was registered.
- Transfer of properties as gifts to charitable organizations.
- Transfer of family property to a company fully owned by the same family
- Land transfer from a holding company and its subsidiaries where the holding company owns not less than 90% of the subsidiary’s shares.
How To Pay Stamp Duty in Kenya
Most systems in Kenya have been digitalized hence you can pay for a stamp duty online. Here is how to go about it.
1.Log into the I Tax portal
- Select payment registration under the payment menu.
- Select the tax head applicable as agency revenue and the subhead as the Stamp Duty.
- Fill in the applicable details and submit, then wait for the payment slip immediately.
- Once you get the slip, you can pay via Mpesa or the bank.
Which Documents/Instruments Are Assessed for Stamp Duty
- City council leases
- All land transactions involving change of ownership either via gifts, valuable consideration, or land partition.
- Mortgages, charges, and debentures.
- Deeds, bonds, consultations, Easements, general and specific Power of Attorney, Commissioner of Oaths, Guarantee, and Deed of Indemnity.
- Agreements under a power of Attorney at 5 pounds on the agreement and 4% of the consideration of the power of Attorney. Revocation of power, surrender, supplemental charge, and partial discharge.
- Deed of Partition is assessed at 2%.
These are the instruments that are assessed for stamp duty. However, some are not assessed, including Cautions, Affidavits, Court Orders, Wills, and Caveats.
According to the Stamp Duty Acts, these documents must be stamped within 30 days of acquisition. Otherwise, there will be a penalty. The tax should be paid within 30 days for locally prepared transactional instruments. However, for documents prepared from abroad and sent for local registration, the stamp duty must be paid within 30 days of receiving the documents.
If the duty is not paid within the stipulated timeframe, all the relevant transactions will be invalidated, and any agreement signed between the parties will be nullified.
If you pay more than you should, you should apply for a refund within one year. The question many ask is do you pay stamp duty when buying land? Yes.
Conclusively, it’s important to understand Stamp Duty whether you are selling or buying land in Kenya. I hope I have explained the basic details you need about Stamp Duty and that you will have a smooth transfer process. Call Denver Real Estate and using the stamp duty calculator Kenya we will guide on how to determine the amount of stamp duty to pay.