Kenya Inheritance & Gift Tax Guide 2026

No Inheritance Tax

Kenya is one of many Commonwealth countries that does not levy an inheritance tax or estate tax. When a person dies, their estate passes to heirs without any tax liability to the estate or to individual beneficiaries. There is no filing requirement, no exemption threshold, and no tax return related to inheritance. This makes Kenya a favourable jurisdiction for wealth transfer from a tax perspective. The absence of inheritance tax is a long-standing feature of Kenyan tax policy, with the estate duty having been abolished in the 1980s.

No Gift Tax

Kenya does not impose a gift tax on transfers made during the donor's lifetime. Gifts of cash, property, shares, or other assets are not subject to any tax in the hands of either the donor or the recipient. There are no annual gift exemptions, thresholds, or reporting requirements. However, gifts of income-generating assets (such as rental property) subject the recipient to income tax on the income derived after the gift. Gifts of assets subject to CGT (like property) may trigger CGT for the donor if the gift is at arm's length value, though gifts between family members at below-market value may be assessed at market value by KRA.

Law of Succession Act (Cap. 160)

Inheritance in Kenya is governed by the Law of Succession Act (Cap. 160), which applies to all Kenyans regardless of religion, with some exceptions for Muslims who may apply Islamic succession law. Key provisions include:

• Intestate succession: If no will exists, the estate is distributed to the surviving spouse and children (or parents if no children). The spouse is entitled to a life interest in the matrimonial home and a share of the estate.
• Testate succession: A will may dispose of property freely, subject to the provision for dependants (spouse, children, parents) who may apply to the court for reasonable provision if excluded.
• Grant of representation: The executor (if a will exists) or administrator (if no will) must obtain a grant of probate or letters of administration from the High Court, which authorises the distribution of the estate.

Property Transfer Upon Inheritance

When real estate is transferred to heirs upon death, the following costs apply:

• Stamp duty: 2% of the property value (standard transfer duty, payable by the beneficiary)
• Land registration fees: ~0.1% of property value (capped at KES 100,000)
• Court fees: KES 50,000–150,000 depending on the estate value for the grant of probate or letters of administration
• Legal fees: Typically 1–3% of the estate value for the succession lawyer

The succession process requires obtaining a grant from the High Court, which can take 3–12 months depending on complexity, disputes, and court schedules.

No Step-Up in Cost Basis

Kenya does not provide a step-up in cost basis for inherited assets. When an heir sells an inherited asset (such as property), the cost basis for calculating CGT is the original purchase price paid by the deceased, not the fair market value at the date of death. This means that heirs may face a significant CGT liability upon sale, as the gain reflects the entire appreciation from the original purchase through the date of sale. For example, if the deceased bought land for KES 1 million in 2010 and it is worth KES 10 million at death, the heir selling it for KES 10 million would pay CGT of 5% on KES 9 million (KES 450,000).

Estate Planning Considerations

Although Kenya has no inheritance or gift tax, proper estate planning is still important. Key considerations include making a valid will, minimising delays in the succession process, ensuring sufficient liquidity to pay estate expenses (stamp duty, legal fees), and considering the CGT implications when heirs plan to sell inherited assets. Trusts are commonly used in Kenya for estate planning, offering asset protection and succession planning benefits. Family trusts are subject to income tax at 30% on retained income but distributions to beneficiaries are taxed in the beneficiaries' hands.

FAQs

Do I need to file a tax return for inherited assets?

No, the inheritance itself is not taxable and requires no tax filing. However, if inherited assets generate income (rent, dividends), that income must be declared in the heir's annual tax return.

Can I make a will under Kenyan law?

Yes, any person aged 18+ and of sound mind may make a will. The will must be in writing and signed by the testator and two witnesses who are not beneficiaries. Muslim Kenyans may also make written wills in accordance with Islamic law.

Are transfers between spouses subject to tax?

No, transfers between spouses (whether by gift, inheritance, or divorce settlement) are not subject to income tax, CGT, or gift tax. Stamp duty at 2% still applies to property transfers. A full spousal exemption applies for CGT purposes.

Disclaimer

This guide provides general information about Kenyan inheritance and gift tax rules for the 2026 tax year. Tax laws and succession rules may vary. Always consult with a qualified Kenyan legal advisor or the Kenya Revenue Authority for advice specific to your situation. InvestmentKit does not provide legal or tax advice.