Increase Of Stamp Duty Costs On Transfers Of Gazetted Out Of Town Areas

Legal Alert 

Stamp duty tax is levied at a rate of 4% on the transfer of land, houses and apartments in urban areas, which are within municipalities and 2% for areas outside municipalities. Recently, via a letter dated 5th April 2024, the principal secretary for the Ministry of Lands and Physical Planning adopted the council of governor’s list of gazetted areas which are over 83 municipalities including Kitengela, Kajiado, Limuru, Nyeri, Nakuru, Naivasha, Kericho, Murang'a, Machakos, Kiambu among many others that are to be considered municipalities and therefore subject to a double tax of 4% stamp duty tax on the transfers instead of the previous rate at 2%. 

This directive was declared to take effect immediately. This means that from the date of declaration, all ongoing transactions and those that shall take place onwards will be subject to the 4% stamp duty rate. It’s therefore important that the purchasers with ongoing transfers take note of the affected areas to avoid paying penalties that may accrue due to non-payment of the required stamp duty costs. The registrars who do not abide by the rule and fail to implement the directive shall be held personally liable for the revenue lost.  

This was implemented a few months after the Kenya Revenue Authority shifted the collection of stamp duty to the Ministry of Lands to decentralize the tax collection. This is now done on the Ardhisasa account platform as opposed to the earlier Itax portal. 

Consequently, this far-reaching decision has rendered real estate investment as one of the areas where Kenyans will have to dig deeper into their pockets as the government continue to increase taxes all across the board in a bid to generate state revenue.