First-time Home Buying can be an exciting step. There are many costs and fees a first-time homebuyer needs to consider when looking for a property. One of these costs includes a stamp duty tax, which is a tax on your land or property. First-time homebuyers in Kenya will benefit from tax incentives after President Uhuru Kenyatta signed changes to the Stamp Duty Act into law. This hands a reprieve to home buyers from paying stamp duty as the government seeks to ease homeownership under its housing act.
The move by the Kenyan government is aimed at promoting homeownership among most Kenyans. This correlates with the Big Four Agenda which looks to create 500,000 new homeowners through the facilitation of affordable housing. The Tax Laws (Amendment) Bill was introduced by National Assembly Majority Leader Honourable Aden Duale on 10 April 2018. The government amended the Stamp Duty Act exempting stamp duty charges for first-time home buyers. The move will likely make it more affordable for an individual to buy a house and is ranked as a major expenditure in property acquisition. First-time Home Buying
First-time Home Buying
In 2017 the United Kingdom scrapped stamp duty for first-time homebuyers in England, Northern Ireland and Wales as part of the UK’s government efforts to ease the challenges facing prospective home buyers. The stamp duty exemption in the United Kingdom applies to purchases of properties of up to £500,000. Properties valued up to £300,000 do not attract any stamp duty, as property valued between £300,000 and £500,000 attracts stamp duty of 5 per cent. First-time Home Buying
At present the Kenya Revenue Authority (KRA) charges a stamp duty of between two and four per cent of the value of the property, thus increasing financial pressure on buyers. In the case that an investor purchases a property for Sh15 million the stamp duty cost charged is Sh600,000. The amount is required to be paid within 30 days of contract execution. The government aims to put to market 50,000 houses between Sh750,000 and Sh1.5 million through its affordable housing plan. First-time Home Buyers
The Tax Laws Amendment Act, 2018 amended the Act by introducing Section 117(K) that allows for exemption from payment of stamp duty for first-time homebuyers under the Affordable Housing Scheme. This means that the buyers will only meet other outlays such as lawyer’s fee, valuation costs and a commitment fee to the bank. Section 17 of the Act allows an individual to explore an option to reduce the stamp duty implications on their transactions even if a specific exemption has not been provided in the Act. Properties transactions that are exempted from stamp duty include the transfer of property in a will, gifts to charitable organisations, transfers between associated companies and spousal property transfer. Stamp duty exemption is a major relief to first-time homebuyers, as this will also reduce the time taken to conclude any business transaction. First-time Home Buyers