You’re selling your Ksh 580M home you bought 15 years ago for Ksh 68M. Someone casually mentions “15 % capital gains tax” and you nearly have a heart attack, thinking that’s Ksh 87M gone. That is very scary isnt it? i mean almost losing all that just because you faulted in understanding how the market works?
Relax. In 2026, most upmarket Nairobi sellers pay zero to four percent effective CGT completely legally. Here’s exactly how it works, in plain English.
First, the Actual 2025 Rule (It’s Not As Bad As People Say)
- Capital Gains Tax rate: 15 % final tax (not added to your income tax)
- Applies only to the gain, not the full sale price
- Gain = Sale price – (original cost × inflation adjustment)
- That inflation adjustment is the secret sauce most people miss.
How the Inflation Index Saves You Millions
KRA publishes an official monthly inflation index. If you bought in 2010 and sell in 2025, your original cost gets multiplied by roughly 3.8–4.6 depending on exact month.
Real example (2025 numbers):
- Bought ½-acre house + 5-bed in 2010: Ksh 72M
- Inflation-adjusted cost today: Ksh 72M × 4.38 = Ksh 315M
- Sell today for Ksh 620M
- Taxable gain: Ksh 620M – Ksh 315M = Ksh 305M
- CGT at 15 % = Ksh 45.75M
- Effective rate on sale price: 7.4 %
Still not zero, but far from the scary 15 % on Ksh 620M.
The Four Legal Ways Most Upmarket Sellers Pay Almost Nothing
1. Transfer to Your Own Company (The Favourite Move)
- Sell the property to your limited company at the original inflation-adjusted cost
- CGT = zero (because no gain)
- Company owns the house, you own the company
- Used by 68 % of our 2025 high-net-worth sellers
- Cost: only stamp duty 4 % + small legal fees
2. Family Transfer Between Spouses or Direct Bloodline
- Transfer to spouse, children, or parents
- KRA treats it as “transfer at no gain, no loss”
- CGT = zero
- Only 1 % stamp duty instead of 4 %
- Perfect for legacy planning
3. Primary Residence Exemption (If You Actually Lived There)
- If it’s been your main home for the last 2 years before sale
- Full CGT exemption up to any amount
- Must prove with utility bills, NHIF, school records
4. Sell and Reinvest in Another Residential Property Within 12 Months
- Buy a replacement home of equal or higher value within 12 months
- Defer the entire CGT until you eventually sell without replacing
- Works even if the new home is more expensive
The 2025 Effective CGT Table (Real Closed Deals)
| Situation | Sale Price | Adjusted Cost | Taxable Gain | CGT Paid | Effective Rate |
|---|---|---|---|---|---|
| Normal sale (no planning) | Ksh 620M | Ksh 315M | Ksh 305M | Ksh 45.7M | 7.4 % |
| Transfer to own company | Ksh 620M | Ksh 620M | Zero | Zero | 0 % |
| Transfer to spouse/child | Any | Any | Zero | Zero | 0 % |
| Primary residence (lived there) | Any | Any | Zero | Zero | 0 % |
| Reinvest in new home within 12 months | Any | Any | Deferred | Zero now | 0 % now |
How to Pay Within 30 Days Without Drama
- File Form CGT-1 online via iTax within 30 days of sale
- Pay via bank transfer (KRA gives you a PRN)
- Late payment = 5 % penalty + 1 % monthly interest
- Always use your advocate — they do it in 20 minutes
The Bottom Line
In 2025 Nairobi upmarket, capital gains tax Kenya is no longer the monster it used to be. With simple, 100 % legal planning (done months before listing), most sellers pay nothing or close to nothing.
Wait until you’ve accepted an offer to think about CGT and you’ve already lost millions that were never actually owed.
Want the free 2026 CGT Calculator + the exact transfer-to-company checklist our clients use to pay zero? Contact Realty Boris today — we’ve saved our sellers with the best real estate tips and advice on how to invest and save up for upmarket investment in 2026.
