If your property has appreciated significantly over time and you’re planning to sell, you may want to consider rebasing it.

What is rebasing

Think of rebasing like pressing ‘refresh’ on your property's value. It involves resetting the acquisition cost of a property to its current market value,

Why is this important?

Because Capital Gains Tax (CGT) is calculated on the difference between the selling price and the acquisition cost. By updating the acquisition cost to a higher market value, the taxable gain is reduced and that means you pay significantly less tax when the property is disposed of.

Scenario:
Commissioner of Domestic Taxes v. Shah & 2 others (Income Tax Appeal E054 of 2023) [2024] KEHC 7802

In 2015, two siblings inherited two parcels of land from their late father. Five years later, in 2020, they sold the properties to Risun Development Company for Kshs. 305,584,000.

To determine the Capital Gains Tax (CGT) due, they engaged Knigh...