Stamp Duty Explained: Here's What It Is & How It Works

When Christine came to our office, she seemed confused and was eager to sit down with the sales manager. "Should I pay the stamp duty as you do my transfer?" She asked. Christine had just bought two plots at Dhahabu Plains Matuu Phase 2. Luckily for Christine, Dhahabu Land Ltd's land cost includes transfer fees and stamp duty, but we understood it was important that we take her through what stamp duty is, who should pay stamp duty, and when it should be paid. You may be surprised from even a search on Google thatthousands of Kenyan internet users out there still don't know what stamp duty is. So LET'S TALK STAMP DUTY.

What is stamp duty?

Stamp duty is a tax levied on various transactions such as the transfer of properties, shares, and stocks.

Who pays the stamp duty on a property?

The home/land buyer always pays stamp duty, not the seller, unless the buyer has an arrangement with the seller to do so.

How much is stamp duty?

The current stamp duty rates are 4% of the valuation amount for lands within municipalities (leaseholds) and 2% for land outside municipalities (freeholds). However, through the Tax Laws (Amendment) Bill signed into law by President Uhuru Kenyatta in 2018, the government amended the Stamp Duty Act to exempt individuals buying their first homes. Therefore, all buyers and sellers of property are required to update their profiles on iTax to facilitate stamp duty. Stamp Duty will also be exempted on a family property transfer to a company wholly owned by the same family members. It does not occur automatically, though, it must be applied for and evidence provided.

Refunds of stamp duty are only granted if the collector is satisfied that the tax assessment was wrong. A refund application is filed within one year from the payment date. It is also important to abide by the provisions of the Stamp Duty Act when paying stamp duty on real estate transactions such as leases, transfers, and mortgages. For documents prepared locally, stamp duty must be paid within 30 days.

How to pay stamp duty:

  1. Log on to the iTax portal
  2. Under the payment menu, select "Payment Registration."
  3. Select the tax head applicable as agency revenue and the subhead as Stamp Duty.
  4. Fill in the applicable details to the end and submit, after which you get the payment slip.
  5. After that, make the payment either through the bank or using the M-PESA PayBill Number provided by KRA on the iTax portal.

This process is quite seamless and one of the simplest in the iTax system. Christine left Dhahabu Lands Ltd's offices content and with a better understanding of stamp duty and the process of land buying. She was happy with how Dhahabu handled the whole process for our clients and even invited her friend to come for a site visit and see why everyone is rushing to buy Dhahabu Plains Matuu Phase 2. If you're a Kenyan looking to buy property, you'll have to familiarize yourself with stamp duty. But it's not that hard! While you shouldn't stress about it too much, you should make sure you understand the tax basics and how to best account for it as a property owner in Kenya.

OUR BLOGS

6 Reasons Why Investing In Real Estate in Kenya Is A Win-Win Situation

Kenya is open for business. The industry of Kenya is a mixture of local free markets, foreign investments, and global market demand. The government is pro-business, striving to grow the economy to provide the national citizens with a long-term better life.

Stamp Duty Explained: Here's What It Is & How It Works.

You may be surprised from even a search on Google that thousands of Kenyan internet users out there still don't know what stamp duty is. So LET'S TALK STAMP DUTY.

Why Buying a Land In Matuu Is The Best Investment You Will Ever Make.

It's not news that land in Matuu is hot property right now. Matuu is one of the fastest growing towns in Kenya.

Why 2022 is a must own Land Year

Over the last one and a half decade, buying and selling of land has experienced an exponential boom in Kenya. It has become...

Mount Kenya Is Opening Up

With Government’s recent commitment to improve and construct new roads we have seen an increase in the value of land and properties across Kenya.

2021 Investor’s Day

During our annual Investor’s Day held on Saturday, 30th October 2021, we successfully presented 1500 Title deeds. Thanks to all Dhahabu investors for choosing to invest with us. Title Deed collection is still ongoing from

Malindi and Kilifi are Fast Becoming An Agricultural Hub

WHY YOU SHOULD INVEST IN DHAHABU AGRI-CITY PROJECT The United Kingdom accounts for 43% of Kenya’s vegetable exports. In the year 2020 alone, Kenya’s exports to the UK stood at Kshs.49.9 billion. In the year

Nanyuki Town Changing Fortunes

Laikipia county is a tourism goldmine and a leading wildlife tourism destination. At the heart of this county is Nanyuki town a preferred choice for investors and travelers alike. Strategically positioned between Meru and Nyeri

Nanyuki – Nairobi Railway Rehabilitation

The rehabilitation and repair of the Nanyuki – Nairobi railway branch line is now in high gear. KR recently delivered a locomotive, a coach and carriers to Nanyuki to aid in the rehabilitation process. The

Nanyuki Urban Renewal

“Mwisho Wa Reli” ap. Nanyuki has recently received a boost due to the revival of the old railway.

How To Protect Yourself And Others

“Wash your hands frequently. Regularly and thoroughly clean your hands with an alcohol-based hand rub or wash them with soap and water. Why? Washing your hands with soap and water or using alcohol-based hand rub kills.

Better ways to invest in land.

Over the last one and a half decade, buying and selling of land has experienced an exponential boom in Kenya.It has become the most sure bet for making wealth as urban centers grow and the