Capital Gains Tax

A capital gain tax is a levy charged on the profit that an investor makes from the value of an asset. The tax is not limited and applies to any type of asset. For a long time,  capital gain tax has been at 5% but there was a proposal from the treasury secretary to raise it to 15% in 2022.  Let us look at more information about capital gains returns.

What Does a Property Transfer Entail

• A transfer involves selling, exchanging, conveying, or disposal of any property in any way. This could also be through gifting.
• In the case of a loss, extinction, or destruction of property, the sum received for compensation or destruction is used to reinstate the property in the same manner and within the same place in a year or a long time, depending on the approval by the commissioner.
• Surrender, abandonment, cancellation, or expiry of all substantial rights to the property. This includes shares surrendering or debentures in case a company is dissolved.

What Are The Allowable Costs Involved In Capital Gain Tax

• Legal fees
• Enhancements costs
• The cost incurred in property valuation
• Advertisement cost when finding a buyer
• The interest of a loan or mortgage

Determining the Transfer Value/Selling Prices for The Purpose of CGT

• Any amount that is received when the property is in use. For instance rent
• Sums are received in return for the property’s abandonment, surrender, or forfeiture.
• The compensation received for injury, damage, or loss of property 
• Reimbursement of an insurance policy concerning damage, injury, or property loss.
• Amounts received from the transfer of a property.

How do I pay for Capital Gains Tax?

• Capital gain tax is usually due on or before a property is transferred and should not exceed the 20th day after the transfer.
• The payment is made online via iTax.
• The payments can be made either by cash, RTGS, or cheque.
• Once you have initiated the payment, you will be given a payment slip
• This payment slip should be presented at any bank appointed by KRA with the due tax to complete the payment.

NB: The expiry date for the payment slip is within 30 days.

Can I Defer Capital Gain Tax

You can defer capital gain tax until your asset is sold. For instance, if you are in real estate, you will not pay taxes on the equity gained on a property investment until the year you will sell it for a profit. Increased capital gains tax might be tough on investors, more so the ones in real estate. This tax will be paid by both a company and an individual on the transfer of any property in Kenya. This is different from other income taxes. Therefore, it is wise for any investor in Kenya to be keen and aware of what the law says to avoid problems with KRA, more so if the proposal is approved. Denver Group Limited is here to offer you information on how to go about payment of Capital Gains Tax. Buy Property in Kenya from us today, call us 0701 730 267.