Rental income tax in Kenya: a plain guide for landlords

This guide explains the rules in plain terms. It is not tax advice: tax law changes, so confirm with KRA or a tax adviser, especially if your situation is unusual.

What monthly rental income tax is

Resident landlords who earn rent from residential property pay a monthly tax on the gross rent they receive, called Monthly Rental Income tax (MRI). The rate is 7.5% of gross rent. It is a final tax, which means you don't deduct expenses such as repairs or loan interest, and you don't declare that rent again in your annual return.

Who pays it

• Landlords whose residential rent is between KES 288,000 and KES 15,000,000 a year.
• Below KES 288,000 a year, MRI does not apply.
• Above KES 15,000,000 a year, rent is declared with your other income in the annual return instead.
• Commercial rent (shops, offices) is not under MRI.

A worked example

Ten units at KES 15,000 a month bring in KES 150,000 a month, which is KES 1,800,000 a year: inside the MRI range. The tax is 7.5% of 150,000, which is KES 11,250 for that month. Tax is on rent actually received, so a month with vacancies or unpaid rent has a smaller tax.

Try your own numbers with the rental income tax calculator.

When and how to pay

File and pay through KRA iTax or the eRITS rental portal by the 20th of the following month: November's rent is due by 20 December. File a nil return for months with no rent. Late filing and late payment attract penalties and interest.

Keep good records

KRA increasingly checks declared rent against other data. Keep a monthly record of rent billed and received per unit, with M-Pesa codes, so your returns are easy to file and easy to defend. A rent collection system that matches Paybill payments to tenants gives you that record without extra work.