Key Capital Gains Tax (CGT) Exemptions in Kenya — Property & Related Transfers

Capital Gains Tax (CGT) is a critical consideration for anyone involved in property transactions in Kenya. However, Kenyan law provides several important exemptions that can save individuals and families significant costs when transferring property. Here is a comprehensive breakdown of the key CGT exemptions you should know about.

1. Transfer to a Family Trust

Transfers of property (including title) into a registered family trust are exempt from CGT. This directly supports structures like trusts used in estate planning, making it an invaluable tool for families looking to protect and manage their wealth across generations.

2. Transfers Between Family Members

Property transferred between spouses is exempt from CGT. Transfers to immediate family members (e.g., children or parents) are also exempt. Additionally, transfers as part of divorce or bona fide separation agreements are CGT-exempt, ensuring that family transitions are not unfairly burdened by tax obligations.

3. Transfers in Estate Administration

Property transferred by a personal representative (executor/administrator) to beneficiaries in the course of administering a deceased person's estate is exempt. This also applies to transfers by will or under succession law, generally within a specific period allowed by the relevant authorities.

4. Primary Residence Relief

The gain from the sale or transfer of your private residence is exempt if you have occupied it continuously for at least 3 years immediately before the transfer. This is one of the most commonly relied-upon exemptions for individual homeowners.

5. Small-Value Property Transfers

Property with a transfer value of KSh 3 million or less (where the transferor is an individual) is exempt from CGT when individually transferred. This provides relief for smaller transactions that are common in many communities across Kenya.

6. Agricultural Land Exemption

Agricultural land under 50 acres outside municipalities, gazetted townships, or urban areas is exempt from CGT — provided the statutory conditions are met. This exemption supports the agricultural sector and rural landowners.

7. Transfers to Secure or Return a Debt

Transfers made solely to secure a loan or debt (e.g., where land is used as collateral) are not subject to CGT. Likewise, property returned to a creditor after fulfilling the loan or security purpose is exempt. This ensures that routine financial arrangements are not penalized.

8. Assets Taxed Elsewhere & Other Specific Exclusions

Gains that are taxed under other provisions (e.g., property dealers), issuance of shares by a company of its own shares or debentures, and certain share transfers on licensed stock exchanges (CMSA-regulated) are not subject to CGT. These exclusions prevent double taxation and support capital market activity.

Important Notes

You must still apply for CGT exemption through KRA's iTax system and receive confirmation — exemptions are not automatic simply because the transaction falls into one of the above categories. Failure to apply could result in penalties or delays in your property transaction.

The exemptions listed above reflect statutory provisions under Kenyan law as interpreted and current as of 2026. For specific advice on your property transaction, we recommend consulting with our team to ensure full compliance and to maximize the exemptions available to you.