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TaxUpdated 1 min read

Rental income tax in Kenya: how the monthly regime works

Resident landlords with residential rent within the threshold pay a flat monthly tax on gross rent. Here is how it works.

By Wakili Link Editorial

Rental income is taxable in Kenya. For resident individuals and companies earning residential rental income within the statutory annual threshold, the monthly rental income (MRI) regime applies.

How MRI works

  • Tax is charged at a flat rate on gross rent received (7.5% at the time of writing) — no deduction of expenses.
  • The return is filed and the tax paid monthly on iTax, by the 20th of the following month.
  • It is a final tax on that income.

Who is outside MRI

  • Commercial rental income — taxed under the normal regime as part of annual income, after allowable expenses.
  • Landlords whose residential rent exceeds the threshold.
  • Non-residents, who are subject to withholding tax.

Records to keep

Keep tenancy agreements, a rent schedule and proof of payments received.

Penalties

Late filing and late payment attract penalties and interest. If you have not been declaring rent, consider the voluntary disclosure options available from KRA.

Rates and thresholds change through Finance Acts — confirm the current position before filing.

This article is general information, not legal advice on your situation.

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    Rental income tax in Kenya: how the monthly regime works