AFFORDABLE HOUSING SCHEMES (TAX LAWS (AMENDMENT) ACT, 2018)
The Tax Laws (Amendment) Act, 2018 has been signed into law by the President.
Key among the amendments introduced by the Act is an amendment to the Stamp Duty Act (Cap. 480) relating to exemption from stamp duty.
Section 117 of the said Act “Exemptions from Stamp Duty” has been expanded by introducing as a new category for exemption from stamp duty, that is [new] Section 117 (1) l, which exempts from stamp duty,“the purchase of a house by a first time home owner under affordable housing scheme”
Stamp duty on the purchase of a house in Kenya is calculated at the rate of 4% of the purchase price or the market value of the house (whichever is higher) if the house is within a municipality, or at the rate of 2% of the purchase price or the market value of the house (whichever is higher) if the house is outside a municipality.
Stamp duty takes up a significant portion of closing costs of buying a house and this exemption will come as a big relief to many Kenyans aspiring to own a home.
The process of ascertaining market value has also been a bottleneck in the process of purchasing a house since it involves sending a Government Valuer to the site to endorse the market value on the transfer instrument. This has been in many way a duplication of roles since at the onset, a purchaser seeking finance from a bank or other mortgage financier will already have been charged costs of valuation of the house by a private property valuer, not to mention the delays associated with mobilizing a Government Valuer to go to site.
MUTUA WAWERU & COMPANY Advocates regularly acts for bank and mortgage financiers in home purchases. For further information contact the Partner.
Partner and Head – Commercial Transactions & Conveyancing