When buying or selling property, you must understand stamp duty. This tax, levied by the Kenya Revenue Authority (KRA), applies to all properties changing ownership within the country. Whether purchasing land from a company or an individual, you are legally obligated to pay a percentage of the transaction amount as tax.
What is Stamp Duty?
Stamp duty is a tax on properties, usually imposed on a change of ownership. In the context of property transactions, it is a mandatory fee that the buyer must pay for the ownership of the property to be legally transferred to them.
How is Stamp Duty Calculated?
The amount of stamp duty you need to pay depends on two factors:
- Type of Land: The tax rate varies depending on whether the land is freehold or leasehold. The stamp duty rate on freehold land is 2% of the property’s value. In the case of leasehold land, the rate is 4% of the property’s value.
- Value: The land value is determined by the Land Valuer at the Ministry of Lands (they will often use the transaction value as noted in your sale agreement if it is higher than what they determine).
The Payment Process
The payment is made through the KRA portal by the buyer of the property and an official receipt will be. The official receipt and proof of payment are some of the required documents for the property to be transfered to the buyer by the Ministry of Lands.
Why is Stamp Duty Important?
Paying stamp duty is not just a legal requirement; it also ensures the legitimacy of your property transaction. Without paying this tax, the Ministry of Lands will not process the change of ownership, meaning the title deed cannot be transferred to you. This could lead to legal complications and potentially jeopardise your ownership rights.
Understanding and complying with stamp duty regulations is vital for anyone involved in property transactions. At GrandAcres, we strive to make this process as transparent and straightforward as possible. We ensure you secure a safe investment by meeting all legal obligations.
If you’re considering a land investment, don’t hesitate to contact us and secure your stake in Kenya’s promising future. Click on this link for more information on our current properties – https://bit.ly/GALProperties
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