Rental Income Tax in Kenya: KRA Rates, Filing, and What Landlords Actually Owe (2026)

The Short Version

If you earn between KES 288,000 and KES 15,000,000 in annual rental income (that's KES 24,000 to KES 1,250,000 per month), you owe 7.5% of your gross rent to KRA every month. No deductions. No excuses. File by the 20th of the following month.

That's the Monthly Rental Income (MRI) tax. It's been in effect since 2016, with the rate reduced from 10% to 7.5% in January 2024.

Who Must Pay

You must pay MRI tax if:

• You earn rental income from residential property in Kenya
• Your annual rental income is between KES 288,000 and KES 15,000,000
• You are a resident landlord (Kenyan citizen or resident foreigner)

You are exempt if:

• Annual rental income is below KES 288,000 (less than KES 24,000/month) — too low to qualify
• Annual rental income exceeds KES 15,000,000 — you must use the normal individual/corporate income tax rates instead
• The property is commercial (shops, offices) — different tax treatment applies

The Rate: 7.5% on Gross Rent

Gross rent means the total rent you receive. Not net. Not after expenses. The full amount tenants pay you.

That's it. No complex calculations. Just total rent received × 0.075.

No Expense Deductions Under MRI

This is where landlords get frustrated. Under the MRI scheme, you cannot deduct:

• Maintenance and repair costs
• Property management fees
• Insurance premiums
• Mortgage interest
• Caretaker salaries
• Water and electricity for common areas

The 7.5% is calculated on gross rent, period. This simplifies filing (one number to report) but means you pay tax even when expenses eat into your profit.

When Expense Tracking Still Matters

Even though MRI doesn't allow deductions, you should still track expenses if:

• You're approaching the KES 15M threshold — above this, you switch to normal income tax which DOES allow deductions
• You want to know your actual profit (not just gross income)
• You're planning to sell the property and need capital gains records
• Your accountant needs clean data for annual financial statements

When to File: Monthly by the 20th

The MRI tax is filed and paid monthly:

• Rent collected in January → File and pay by February 20th
• Rent collected in February → File and pay by March 20th
• ... and so on every month

You file on iTax (itax.kra.go.ke). The process takes about 10 minutes if you have your total rent figure ready.

How to File on iTax (Step by Step)

1. Log in to itax.kra.go.ke
2. Go to Returns → File Returns
3. Select tax obligation: Residential Rental Income Tax
4. Select the month you're filing for
5. Enter total gross rent received that month
6. The system calculates 7.5% automatically
7. Submit the return
8. Pay via M-Pesa (Paybill 572572, account number = your KRA payment slip number)

That's it. The hardest part is knowing your exact total rent for the month — which is where record-keeping matters.

Penalties for Not Filing

KRA is not playing. Penalties include:

• Late filing: KES 2,000 per month of delay OR 5% of tax due — whichever is higher
• Late payment: 1% interest per month on unpaid tax
• Non-disclosure: KRA has been cross-referencing data from banks, M-Pesa transaction records, and the lands registry to identify landlords who don't declare income

If you've been receiving rent and not filing, KRA can assess you for all back years plus penalties. The cost of compliance (7.5% of rent) is significantly less than the cost of getting caught.

The Record-Keeping Problem

Most landlords fail at tax compliance not because they refuse to pay — but because they don't know their exact numbers.

When filing day comes, you need one number: total gross rent received this month. Simple. But if your rent comes via M-Pesa from 20+ tenants, some paying late, some paying partial amounts, some paying for multiple months at once — calculating that number from raw M-Pesa statements takes hours.

This is where property management software pays for itself. If every rent payment is recorded automatically as it comes in, your total monthly collection is always available — one number, ready to file. No guessing, no digging through statements, no risk of underreporting or overreporting.

Common Mistakes Landlords Make

1. Not filing at all

KRA knows you own property (land registry data) and that tenants are sending you M-Pesa (Safaricom data). Non-compliance is increasingly risky.

2. Underreporting income

If your M-Pesa records show KES 500,000 in rent but you declare KES 300,000, the discrepancy is detectable. Report the real number.

3. Filing annually instead of monthly

MRI must be filed monthly, not annually. Even though the annual tax return (due June 30th) also covers rental income, the monthly obligation remains separate.

4. Trying to deduct expenses under MRI

You can't. The 7.5% is on gross rent, no deductions. Accept it and file clean.

5. Not keeping records

If you can't prove how much you earned, KRA will estimate — and their estimate will not be in your favor.

MRI vs Normal Income Tax: Which Applies to You?

Bottom Line

Rental income tax in Kenya is straightforward: 7.5% of what you collect, filed monthly by the 20th. The only hard part is knowing your exact collection figure — and that's a record-keeping problem, not a tax problem.

Keep clean records, file on time, pay what you owe. The penalties for non-compliance far exceed the cost of the tax itself.