Tax Calculations: Capital Gains Tax-Are You Exempt?

November 14, 2022

Tax Calculations: Capital Gains Tax-Are You Exempt?

“If you can’t explain it simply, you don’t understand it well enough”- Albert Einstein. If, like the author of this post, you are not an auditor, or accountant or have little to no excitement when it comes to numbers and especially tax calculations, here is a FREE crash course on Capital Gains Tax.

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Capital Gains Tax or CGT (as the professionals know it) is a tariff charged on the transfer of property. In Kenya, all property acquired on or after January 2015 is subject to this tax.

A transfer of property happens when a property is sold, exchanged, awarded or otherwise disposed of in any form. Destruction, abandonment, surrender, cancellation, or forfeiture of property shall too be considered a successful transfer. properties that incur CGT include land, buildings, securities, and shares.

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So, when can you be exempt from this rule?

If you undertake a transfer to secure a loan, or transfer assets to your spouse, you are exempt from CGT.
Transfer of assets between former spouses as part of a divorce settlement or a bona fide separation agreement;
If a personal representative of any property transfers it to someone else as a beneficiary in the process of the administration of the estate of a deceased person.
Transferring property to immediate family;
A transfer of shares listed on the Nairobi Securities Exchange is exempt from CGT.
If perhaps you’re a creditor and launch a transfer on an asset to solely redeem property used as security for a debt or a loan you are exempt from CGT.

The Government of Kenya increased, the CGT rate to 15 per cent, with effect from 1 January 2023, significantly low in comparison to other East African countries and other African countries such as South Africa, Botswana, Egypt and Ghana.

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