For millions of Kenyans chasing the dream of owning a home, the road is often blocked by high mortgage rates, rising land prices, and steep upfront costs. But there’s a lesser-known lifeline that can make homeownership more affordable — the Home Ownership Savings Plan Kenya tax relief initiative.
Introduced under Section 22C of the Income Tax Act, the Home Ownership Savings Plan (HOSP) is more than just a savings account. It is a government-backed tax relief program that encourages Kenyans to save consistently toward buying or building their first home — and offers up to Ksh 96,000 in annual tax relief.
What Is a Home Ownership Savings Plan (HOSP)?
A HOSP is a savings account opened with an approved financial institution, such as a commercial bank or a licensed mortgage provider, specifically for the purpose of saving toward home ownership.
Under this scheme, contributors can claim tax relief on savings of up to Ksh 8,000 per month, which translates to Ksh 96,000 per year — a significant deduction from taxable income for salaried individuals.
With the Home Ownership Savings Plan Kenya tax policy, saving toward a house no longer just secures your future — it also lowers your current tax burden.
Who Qualifies for HOSP Tax Relief?
To benefit from the Home Ownership Savings Plan tax relief, you must:
- Be a resident Kenyan taxpayer.
- Be saving to purchase or construct a first residential home.
- Save through a registered HOSP provider approved by the Kenya Revenue Authority (KRA).
- Stay in the plan for a minimum of 10 years unless you are purchasing or building earlier.
If you withdraw funds before this period for non-housing purposes, penalties or tax clawbacks may apply.
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Data Table: HOSP Tax Relief vs. Traditional Savings (2025)
| Criteria | HOSP (Home Ownership Savings Plan) | Traditional Savings Account |
|---|---|---|
| Tax Relief | Up to Ksh 96,000/year | None |
| Monthly Maximum Deduction | Ksh 8,000 | N/A |
| Minimum Term | 10 Years or earlier for home use | No fixed term |
| Penalty for Early Withdrawal | Yes (loss of tax relief) | No penalty |
| Interest Rate (Avg) | 6% – 8% (varies by provider) | 2% – 4% |
Source: Central Bank of Kenya, KRA, industry averages (2025)
How to Use a Home Ownership Savings Plan Calculator
Before committing to a HOSP, it’s wise to use a home ownership savings plan calculator. Most banks now offer online tools that allow you to estimate:
- Total savings over a set period
- Annual tax relief you will enjoy
- Estimated interest earned
For example, if you save Ksh 8,000 per month for 5 years at an average interest of 7%:
- You will save: Ksh 480,000
- Tax relief enjoyed: Ksh 480,000 x 30% = Ksh 144,000 saved from taxes
- Total future value (with interest): Ksh ~550,000
Where to Find the Best Home Ownership Savings Plan in Kenya
Several financial institutions offer HOSP accounts, but not all are equal. Below are some factors to compare when choosing the best home ownership savings plan:
| Institution | Interest Rate | Account Maintenance Fees | Mobile Access | KRA Approved |
|---|---|---|---|---|
| Kenya Commercial Bank (KCB) | 7.5% | Low | Yes | ✅ |
| Housing Finance (HF Group) | 8% | Medium | Yes | ✅ |
| NCBA Bank | 6.5% | Low | Yes | ✅ |
| Cooperative Bank | 7% | Minimal | Yes | ✅ |
Always confirm that your bank is a KRA-approved HOSP provider, as only then will you qualify for the Home Ownership Savings Plan tax relief.
Expert Tips for Maximizing HOSP Benefits
- Start Early: The earlier you begin saving, the more tax relief you accumulate—and the more interest you earn.
- Automate Monthly Deposits: Set standing orders to ensure you hit the Ksh 8,000 monthly cap.
- Stay Committed for at least 10 years if you’re not yet ready to buy a house.
- Track Your Tax Relief: File your HOSP deductions every year with KRA during income tax filing season.
Frequently Asked Questions
Q1: Can I have both a HOSP and a mortgage?
Yes. In fact, saving through HOSP can increase your loan eligibility and reduce your mortgage needs.
Q2: What happens if I lose my job or stop saving?
You may pause contributions, but tax benefits may be impacted depending on your annual income filings.
Q3: Can self-employed individuals qualify?
Absolutely. As long as you pay income tax and file returns, you can benefit from HOSP tax relief.
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Why You Should Consider a Home Ownership Savings Plan Kenya Tax Strategy
If you’re serious about owning a home in the near future and want to ease the financial pressure today, tapping into the Home Ownership Savings Plan Kenya tax relief is a smart move. It’s one of the few government-backed avenues where you save for your future while reducing your taxable income today.
Whether you’re a young professional, a mid-career family builder, or a returning diaspora investor, the HOSP offers a reliable, structured path to home ownership in Kenya — and the sooner you start, the greater your reward.
