Land Transfer - Capital gains tax

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evroza

Village Elder
#1
I know what it seems like, I have an affinity for tax evasion. This is different, I promise.
A certain piece of land was bought 15yrs ago. Due to unspecified reasons, the buyer and seller have not had the urgency to process title deed transfer; since anyway, they became neighbours after the sale.
An issue has now arisen that requires the urgent transfer of the title, to the said buyer. When the half acre was bought in 1999, it was worth 100k. Right now the market rate is around 2-2.5M. Problem is, capital gains tax which came into effect 1st January, carves out 5p.c after valuation. This may mean parting with about 100k if current price is to be used. Which is clearly unfair, considering that is equal to the amount that actually changed hands 15yrs ago.
Question, is capital gains tax applicable in this case? If so, on which amount? Who knows somebody?

The overweight woman sitting at the lands office had the audacity to lie to the elderly buyer that the tax is 10p.c
 
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Ka-Buda

Village Elder
#2
You could be speaking Chinese and it wouldn`t make a difference.
Hapa labda utuulize mambo ya ngono,hatuwezi kusaidia na mambo Capital gains.
Anyway there is a reason a "coming into effect" date is given on this issues thus clearly defining the cut-off and commencement dates when rules apply;you are either in or out and going by your story,looks like someone is out of luck! (my 2 cents)
 

evroza

Village Elder
#3
You could be speaking Chinese and it wouldn`t make a difference.
Hapa labda utuulize mambo ya ngono,hatuwezi kusaidia na mambo Capital gains.
Anyway there is a reason a "coming into effect" date is given on this issues thus clearly defining the cut-off and commencement dates when rules apply;you are either in or out and going by your story,looks like someone is out of luck! (my 2 cents)
If so then on which amount? 100k or 2.5M
 

Ka-Buda

Village Elder
#4
If so then on which amount? 100k or 2.5M
If any transanction on this land is going to happen after January 1st then they will have to pay the tax based on the current value which is 2.5M. I stand to be corrected by anyone in the know but it sounds straight forward and clear enough.
 

Goks

Village Elder
#8
If any transanction on this land is going to happen after January 1st then they will have to pay the tax based on the current value which is 2.5M. I stand to be corrected by anyone in the know but it sounds straight forward and clear enough.
You are right about the coming to effect date part. For the tax portion, the tax levied will be based on the current value less the purchase price (15 years ago)....hence the term cap gain

Taxable portion = current value - Pprice

In your case above, if lets say the land is valued at 2.5M, the capital gain taxable amount before tax is 2.4M.

@evroza...are there any improvements made on the land?

Also this is a unique case by itself since the purchase of the land was 15 years ago...my advice will be they see a CPA/tax lawyer as they can argue their case if they still have the old sale/ purchase records or transactions.

The law as read below has a grey area(underlined below)of which the government can use to nullify their argument. All the best....

The CGT will be applicable on the gains which accrue to a company or an individual on or after 1 January 2015 on property situated in Kenya, whether or not the property was acquired before 1 January 2015. The rate for CGT on transfer of property is 5%.
 

evroza

Village Elder
#10
You are right about the coming to effect date part. For the tax portion, the tax levied will be based on the current value less the purchase price (15 years ago)....hence the term cap gain

Taxable portion = current value - Pprice

In your case above, if lets say the land is valued at 2.5M, the capital gain taxable amount before tax is 2.4M.

@evroza...are there any improvements made on the land?

Also this is a unique case by itself since the purchase of the land was 15 years ago...my advice will be they see a CPA/tax lawyer as they can argue their case if they still have the old sale/ purchase records or transactions.

The law as read below has a grey area(underlined below)of which the government can use to nullify their argument. All the best....

The CGT will be applicable on the gains which accrue to a company or an individual on or after 1 January 2015 on property situated in Kenya, whether or not the property was acquired before 1 January 2015. The rate for CGT on transfer of property is 5%.
Yes, the owner put up a house and a few structures. It's his residence. Based on your statement above. Is CGT then == ~0? Since gains amounting from 1st Jan to now are insignificant. The land was worth about the same on 31st December. Aren't documents of the house construction enough to prove the owner has occupied the land for all these years.
Also, what do you say of @Luther12's suggestion. What happens if it was a gift? OR, what if documents suddenly appeared suggesting the land was bought at 2.4M back then. Meaning CGT would be on 100K. Does this mean if I bought the land at 2.5M then CGT would be zero?
 

aviator

Village Elder
#11
CGT is one unclear thing. I suppose that the first change will incur 5% of 2.5m just like stamp duty is paid.

If someone buys the same land an year later for 3m, CGT will be 5% on the gain, ie, 500k.

Now, if the land is sold for 2m, the nigga should claim CLT (L for loss) rebate.
 

nairobilay

Village Sponsor
#15
Supposing the said land was given as a gift. What then?
If its given as a gift you will still pay capital gains and stamp duty. I was transferred land by my dad last year and i paid stamp duty even though we wrote inheritance/gift on the transfer forms.

@evroza you are going to pay capital gains on the land at its current land value (as given by the valuation by lands ministry) as well as your stamp duty. pole sana
Unless there is legal documentation showing the sale was done 15yrs ago
 
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Luther12

Guest
#16
Just to derail, how do you create a post on wazua?..... I once tried asking for some info there and I could not create a new post, I had to hijack someones post...and even after that I still lost my comment in the myriad of complicated nonesensicle processes that one has to go through for some simple info that i needed!! Aaaah!
With such an attitude, I'm not surprised. The process is the same as here, you'll be surprised to note. Go to the relevant section (investor, market, sk, etc) and click away. :)
 
L

Luther12

Guest
#17
If its given as a gift you will still pay capital gains and stamp duty. I was transferred land by my dad last year and i paid stamp duty even though we wrote inheritance/gift on the transfer forms.

@evroza you are going to pay capital gains on the land at its current land value (as given by the valuation by lands ministry) as well as your stamp duty. pole sana
Unless there is legal documentation showing the sale was done 15yrs ago
Ya stamp duty naelewa kabisa. The contention here is on CGT.
 

evroza

Village Elder
#18
Thanks all. I came across info that the case was not eligible to pay CGT since the owner had occupied for over 3yrs before sale. As for stamp duty, a certain lands employee has agreed to have the land value at about 600k. 25k it is!
 
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kev

Village Elder
#19
Thanks all. I came across info that the case was not eligible to pay CGT since the owner had occupied for over 3yrs before sale. As for stamp duty, a certain lands employee has agreed to have the land value at about 600k. 25k it is!
iyo ya stamp duty ningekuwa mtaa ungeniona kando ulipe less kabisa
 

kev

Village Elder
#20
I know what it seems like, I have an affinity for tax evasion. This is different, I promise.
A certain piece of land was bought 15yrs ago. Due to unspecified reasons, the buyer and seller have not had the urgency to process title deed transfer; since anyway, they became neighbours after the sale.
An issue has now arisen that requires the urgent transfer of the title, to the said buyer. When the half acre was bought in 1999, it was worth 100k. Right now the market rate is around 2-2.5M. Problem is, capital gains tax which came into effect 1st January, carves out 5p.c after valuation. This may mean parting with about 100k if current price is to be used. Which is clearly unfair, considering that is equal to the amount that actually changed hands 15yrs ago.
Question, is capital gains tax applicable in this case? If so, on which amount? Who knows somebody?

The overweight woman sitting at the lands office had the audacity to lie to the elderly buyer that the tax is 10p.c
boss, excuse my ignorance..kwa zile transaction zote nimefanya lands sijaskiaa hiyo...whether land is transferred as gift intervivo or wareva
 
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