Guidelines on Capital Gains Tax

Guidelines on Capital Gains Tax

KRA recently issued guidelines on Capital Gains Tax (CGT) along with the prescribed self-assessment form (CGT 1) to be used in computing capital gains on property.

CGT came into force on 1 January 2015 and as per the Guidelines CGT will be due on the 20th day of the month following the transfer of the property.

Taxpayers will be required to prepare self-assessment computations, subject to KRA approval, to determine the capital gains arising from their property sales. Once the property is transferred the taxpayer will be required to prepare the CGT 1 form and submit it to the KRA by the due.
Specific the information that is required to accompany the CGT 1 forms are

• Completed CGT 1 form by the seller;
• Copy of Sale/Transfer Agreement of the property;
• Proof of the incidental costs related to the acquisition and transfer of the property;
• A copy of the title deed or ownership document for the property;
• Report from a registered valuer for property transactions between related parties; and
• Any other document/information that the Commissioner may require.


However, there may be a challenge for owners of property acquired or developed many years back in terms of proof of costs of acquisition, development or enhancement and therefore may need KRA to accept alternative evidence in certain cases where it may be impractical to obtain formal records.
Going forward, taxpayers should maintain proper records relating to property expenditure to facilitate correct assessment of CGT for future taxable disposals.

Muiruri jeff and associates are willing to assist the tax payers in application, submission and payment of the assessed capital gain tax.