The Lands Act and Registered Lands Act state that legal instruments such as leases, transfers, charges and mortgages will not be accepted unless they are duly stamped. During the process of buying and selling of real estate properties, one step involves the buyer or their advocate planning for the property to be assessed for stamp duty by a Valuer and subsequently stamping of transfer documents. Recent aamendment to the Stamp Duty Act includes provisions to allow the Collector of Stamp Duties to refer a valuation of property for Stamp Duty to a registered and practicing valuer and not necessarily a government valuer.<\/p>\n\n\n\n
Stamp Duty is calculated on the property value or the purchase price agreed upon; whichever is higher. The rate varies by location of the property and is:<\/p>\n\n\n\n
\u00c3\u0192\u00e2\u20ac\u0161\u00c3\u201a\u00c2\u00b7 4% for land\/property within a municipality<\/p>\n\n\n\n
\u00c3\u0192\u00e2\u20ac\u0161\u00c3\u201a\u00c2\u00b7 2% for agricultural land or property outside a municipality<\/p>\n\n\n\n
\u00c3\u0192\u00e2\u20ac\u0161\u00c3\u201a\u00c2\u00b7 1% if a property is registered as a company and transfer is by way of shares rather than title<\/p>\n\n\n\n
For instance, an investor buying a Sh10 million house<\/a> needs to part with Sh400,000 as stamp duty costs. Through the Tax Laws (Amendment) Bill, the government has amended the Stamp Duty Act to exempt individuals buying their first homes from paying stamp duty.<\/p>\n\n\n\n Stamp duty is levied on property leases at varying rates, depending on the lease duration. Stamp duty is levied at a flat rate of 1% on period leases up to 3 years, and at a flat rate of 2% on period leases exceeding 3 years. The highest figure used in cases of fluctuating rents. Hence, for an annual rent of Sh1 million, duty of Sh10,000 is paid.<\/p>\n\n\n\n Stamp duty charge for mortgages in<\/a> Kenya is payable at the rate of 0.1% of the amount secured by any principal security document. Stamp duty is payable on supplemental security documents at the nominal rate of at Sh2 per every Sh1,000.<\/p>\n\n\n\n \u00b7\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Transfer to held by family to a limited liability company wholly held by members of the same family.<\/p>\n\n\n\n \u00b7\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Transferring between associated companies.<\/p>\n\n\n\n \u00c3\u0192\u00e2\u20ac\u0161\u00c3\u201a\u00c2\u00b7 Transfer between spouses.<\/p>\n\n\n\n \u00b7\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Transfer in favour of any body established for charitable purposes.<\/p>\n\n\n\n How to pay stamp duty in Kenya:<\/strong><\/p>\n\n\n\n All payments for land transactions<\/a> attracting stamp duty shall be made to the State Department for Lands and Physical Planning through e-Citizen via paybill number 222222. Further payment instructions are available when clients click ‘PAY’ on the Ardhisasa platform.<\/p>\n\n\n\n M-PESA PAYMENT OPTIONS<\/strong><\/p>\n\n\n\n Option 1<\/strong><\/p>\n\n\n\n 1. Click on the featured link on the invoice to receive an MPESA menu<\/p>\n\n\n\n 2. Enter the MPESA pin and then click on OK<\/p>\n\n\n\n 3. You will receive a confirmation SMS from M-PESA<\/p>\n\n\n\n Option 2<\/strong><\/p>\n\n\n\n 1. Go to M-PESA menu on your phone<\/p>\n\n\n\n 2. Select Paybill option<\/p>\n\n\n\n 3. Enter Business Number 222222<\/p>\n\n\n\n 4. Enter the Account Number featured in the instructions<\/p>\n\n\n\n S. Enter the amount to be paid<\/p>\n\n\n\n 6. Enter your M-PESA pin and Send<\/p>\n\n\n\n 0746 962239\/0794 067815 020 2717289<\/p>\n\n\n\n The Stamp Duty Act states that documents must be stamped within 30 days<\/a> of acquisition or invite a penalty. For transactional instruments that are prepared locally, the tax should be paid within 30 days. However, for documents executed abroad and sent for registration locally, Stamp Duty must be paid within 30 days of receiving the documents. If, for whatever reason payments exceed the charged amounts, applications for refunds should be made within one year.<\/p>\n\n\n\n When Stamp Duty is not paid within that time frame, this results in the invalidity of the relevant transaction, any agreement signed between the parties becomes null and void, and the same is inadmissible in a Court of Law as evidence. Failure to pay the revenue also leads to a fine that is assessed at five percent (5%) of the principal assessed Stamp Duty for every quarter from the date of the instrument.<\/p>\n\n\n\n After payment of stamp duty, the real estate<\/a> agent, conveyancing lawyer or the busier lodges the property for registration in favour of the buyer. After the registration process, the sellers advocate is legally permitted to release the full proceeds of the sale to the seller. Consequently, the buyer is officially handed over possession of the property<\/a> and becomes the new legal owner.<\/p>\n\n\n\nStamp Duty on Property Leases<\/h2>\n\n\n\n
Stamp duty on Mortgages in Kenya<\/h2>\n\n\n\n
One can apply for stamp duty exemption in Kenya when:<\/h2>\n\n\n\n