tosh gitongaa

What happens when you inherit land... Then later sell it? How does KRA tax it? Let's go through this case. Simplified to today. There is a guy called Dhanjal. He inherited land from his father in 2014. Years later, in 2022, he sold it for 178m. He filed his capital gains tax (CGT) return as a law abiding citizen. - But, CGT = Sales price - Cost price. So, what cost will Dhanjal rely on here? He went for the market price of that land in 2014. The valuer had pegged it at 150m. He computed & paid his taxes as: - (178 - 150) x 15% = 4m. KRA audited him. It rejected his cost of 150m. Their argument: - You did not buy this land. - You got it for free. - Your cost is zero They adjusted his tax to: - (178m - 0) x 15% = 27 m From 4m to 27m. Dhanjal furiously ran to court. He argued: - The cost of inherited land cannot be zero. - The law allows use of market value at the date of inheritance The court looked at it… and agreed with him. He won & KRA’s demand was set aside. Lessons. - The cost of inherited property is not zero - Use market value at the date of inheritance - KRA will push hard. Be firm.