Why Understanding Real Estate Taxes Matters in 2025

Kenya’s real estate sector remains one of the most attractive investment opportunities for both local and diaspora investors. However, maximizing returns isn’t just about buying the right property; it’s about understanding the tax obligations that come with it.

Whether you’re purchasing property in Nairobi, renting out an apartment in Mombasa or selling a commercial building in Kisumu, knowing how Kenya property taxes work in 2025 can save you money and keep you compliant with the law.

1. Stamp Duty – The First Step in Property Ownership

When buying property in Kenya, stamp duty is one of the first taxes you encounter.

• Rates: 4% for urban property, 2% for rural property
• Who Pays: The buyer
• Tip: Always budget for stamp duty in your purchase plan to avoid delays in title transfers.

2. Capital Gains Tax (CGT) – When Selling Your Property

Capital Gains Tax applies when you sell property and make a profit.

• Rate in 2025: 15% of the net gain
• Exemptions: Transfers between spouses, gifts to family, and certain inheritance transactions
• Investor Insight: Timing your sale strategically can help minimize CGT impact.

3. Rental Income Tax – For Landlords and Property Managers

If you earn rental income in Kenya, you must pay rental income tax .

• Rate: 7.5% of gross rental income for residential properties earning between KSh 288,000 and KSh 15 million annually (presumptive tax)
• Commercial Rentals: Subject to normal corporate or individual income tax rates
• Pro Tip: Keep accurate records to maximize allowable deductions and reduce your taxable amount.

4. Withholding Tax – Especially for Non-Resident Investors

If you’re a non-resident property owner , rental payments made to you are subject to withholding tax at 30%. Always confirm how this applies to your investment strategy to avoid surprises.

5. Property Rates & Land Rent – Ongoing Obligations

Local county governments impose annual property rates and in some cases, land rent for leasehold properties.

• Tip: Pay on time to avoid penalties and legal complications.

The 2025 Investor’s Advantage

Kenya’s government is increasingly digitizing tax payments, making compliance easier than ever. The Kenya Revenue Authority (KRA) iTax platform allows property investors to file returns and pay taxes online from anywhere in the world.

Final Word: Taxes Are Part of the Investment Game

Understanding real estate taxes in Kenya is not just a legal requirement; it’s a strategic advantage. If you plan well, you can reduce your tax burden, stay compliant and increase your property ROI.

At Roots Africa , we don’t just help you buy and sell property; we guide you through the legal and tax landscape so you can invest with confidence.

Ready to invest smart in Kenya’s property market? Explore our listings today and take the first step toward building wealth through real estate.